DRs could boost capital flows to India

A regulation prohibiting the issuance of non-capital-raising depositary receipts means India is missing out on potential foreign equity investments.

The renewed confidence in the Indian government’s ability to reignite economic growth and investment since September last year has led to increased inflows of foreign capital into the country’s stock markets.

The additional buying helped push the benchmark index above 20,000 points early this year, and after a dip in February and March, the market is again trading not too far from those levels. But that doesn’t mean everyone is investing. In fact, many international investors are put off by the registration requirements they have to agree to in order to invest in locally-listed Indian stocks and are choosing to stay away from the market altogether.

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