India’s startup ecosystem is just beginning to burgeon, but the country’s complex listing rules are not making it any easier for new enterprises to raise funds from the public. This has proven detrimental to the startup ecosystem in the country, with a number of startups moving overseas to countries such as Singapore and the U.S., where the conditions are more conducive for a newfangled firm to do business. Startups Flipkart and InMobi are examples of firms that have changed their domicile from India to Singapore.
In an attempt to stem this exodus of startups, the Indian stock market regulator, SEBI, has decided to launch a new trading platform that will make it easier for companies to list themselves as well as raise funds. With this move, it is evident that India is now waking up to the fact that startups can prove lucrative to its economy. Although this realization comes late, market watchers are optimistic about it bearing fruit. The changes implemented as part of this move will likely come into force by the end of 2015.
Currently, India has a strong emerging startup culture, with thousands of startups doing business here. In fact, the country has been described as among the best destinations for new entrepreneurs to do business. Spotting this opportunity, a number of global investors such as Accel, SoftBank, and Tiger Global have channeled funds into promising startups. Domains that have seen the most investor interest are digital payments, e-commerce, cab summoning services, and mobility/data analytics.
With the new rules expected to come into force soon, startups can expect better norms for listing, clear IPO pricing rules, and lock-in conditions. As part of the move, SEBI will form a new institutional trading platform, which will be linked with the two stock exchanges that are currently operational in the country.