India’s stock markets are witnessing an unprecedented IPO boom, with companies rushing to list on domestic exchanges. From startups to legacy firms, the momentum is undeniable—but can India leverage this surge to become Asia’s premier listing hub, rivaling Hong Kong and Singapore? Analysts believe the foundation is being laid, but five critical pillars must be strengthened to turn this vision into reality.
1. Regulatory Reforms & Ease of Listing
The Securities and Exchange Board of India (SEBI) has been a driving force behind India’s IPO surge, streamlining processes and reducing approval timelines. However, further reforms are needed to match global standards. Key areas include:
– Faster Approvals: Reducing the current 3–6 month IPO approval window to weeks, akin to Singapore’s framework.
– Relaxed Profitability Norms: Allowing loss-making startups (like Zomato and Paytm) to list earlier, fostering innovation.
– Dual-Class Shares: Adopting structures that let founders retain control post-listing, as seen in the US and Hong Kong.
SEBI’s recent tweaks, like lowering the minimum promoter holding requirement, are steps in the right direction—but more agility is essential.
2. Deepening Liquidity & Investor Base
A thriving IPO market needs ample liquidity. India’s growing domestic investor base (with over 8 crore demat accounts) is a strength, but foreign inflows remain volatile. To sustain momentum:
– Pension & Insurance Reforms: Encouraging long-term domestic capital through pension fund participation in IPOs.
– Retail Investor Confidence: Simplifying IPO allotments and improving post-listing price stability.
– Global Investor Outreach: Proactively marketing Indian IPOs to sovereign wealth funds and global institutions.
The success of recent blockbuster IPOs (like LIC and Tata Technologies) proves appetite exists—but consistent liquidity is key.
3. Strengthening Secondary Markets
A vibrant secondary market ensures IPOs don’t fizzle out post-listing. India must:
– Boost Derivatives Participation: Expanding equity derivatives to hedge risks.
– Improve Market Depth: Reducing volatility through stronger circuit filters and algorithmic trading safeguards.
– Encourage Research Coverage: Mandating analyst coverage for mid-sized IPOs to maintain investor interest.
Hong Kong’s success as a listing hub stems from its deep secondary markets—India must emulate this.
4. Startup & Unicorn Ecosystem
India is the world’s third-largest startup ecosystem, but most unicorns still prefer overseas listings (e.g., Flipkart via Walmart). To retain them:
– Tax Incentives: Offering capital gains tax parity between domestic and foreign listings.
– ESOP Flexibility: Making employee stock ownership plans more attractive.
– Sector-Specific Reforms: Tailoring policies for tech, fintech, and green energy startups.
The recent trend of startups like Mamaearth and OYO opting for Indian listings is promising—but more must follow.
5. Global Competitiveness & Infrastructure
To outpace rivals like Hong Kong and Singapore, India must address:
– Settlement Cycles: Moving to T+1 was a win, but real-time settlements could be a game-changer.
– Easing Compliance: Reducing post-listing disclosure burdens without compromising transparency.
– Currency Risk Hedging: Introducing better forex derivatives for foreign investors.
The Road Ahead
India’s IPO boom is no fluke—it’s backed by strong economic growth, digital adoption, and regulatory progress. However, becoming Asia’s listing hub requires deliberate policy shifts and market maturation. If SEBI, the government, and market participants align on these five pillars, India could soon challenge Hong Kong’s dominance.
For now, the momentum is undeniable. The question is: Will India seize this opportunity or let it slip?
