Govt mulls steps to boost domestic markets

Relaxation in depository receipt framework, Euro clearing of Indian debt in works

The government is working on a number of changes to ease fund raising and increase the competitiveness of domestic capital markets.

A number of steps are in the works and hopefully, they should be in place by the next Budget, said Sanjeev Kaushik, director capital markets, Department of Economic Affairs of the Ministry of Finance on Monday at an event organised by BNY Mellon and BSE.

In July, the finance minister in the Budget speech had announced Bharat Depository Receipts scheme, which would essentially be a revamp of the current Indian Depository Receipt (IDR) scheme.

The IDR scheme has largely been unsuccessful with only one listing that of British banking major Standard Chartered in 2010. Kaushik said the DR regime needs some changes with regard to tax laws.  “The government is working on it and it is hoped that these changes should be in place by the next budget. The government has spoken to various regulators on the depositary receipt regime,” he said.

The Centre is awaiting comments from regulators on the Bharat DRs scheme announced in the Budget. The government is also working on realigning the DR regime with the new Companies Act.

Kaushik said the government is also working on Euroclearing, the world’s biggest bond settlement system, for Indian debt securities. The move is aimed at boosting investments into the domestic debt market.

He added the new Foreign Portfolio Investment (FPI) regime has made life simpler for overseas investors and the government is looking at ways for further easing of routes for foreign investment into the country.

“There is also work being done on making the Indian market more competitive. A team has looked at factors including market  timings. It is expected that some reforms in this regard with respect to derivatives in the equity, currency and commodities space will be in place soon,” he said.

High cost of trading in the domestic market has seen foreign investors preferring trading on Indian products on overseas exchanges in Singapore and Dubai.