With the NSE IX-SGX GIFT Connect now fully operational as of July 2023, allowing trading of USD-denominated GIFT Nifty derivatives, the logical next step is for SGX to explore the development and implementation of a depositary receipt (DR) link between Singapore and the bourses of Mumbai, the National Stock Exchange of India (NSE), and the Bombay Stock Exchange (BSE).
Such a move would significantly deepen economic connectivity and further enhance the capacity of Indian listed companies (listcos) to access capital. The groundwork for such capital markets infrastructure is already in place, considering the significant economic partnership between Singapore and India.
In FY 2022, Singapore accounted for 27.3% of India’s overall trade with the Association of Southeast Asian Nations (ASEAN). Moreover, shifting supply chains are leading Singapore enterprises to tap into Indian metropolises for talent and manufacturing operations.
The Comprehensive Economic Cooperation Agreement (CECA), established in 2005, has played a crucial role in anchoring capital flows and fostering economic engagement between India and Singapore. Singapore has been a leading source of foreign direct investment (FDI) into India, contributing close to 23% of total FDI inflows over the last two decades, which amounts to approximately US$140.98 billion, according to consultancy Dezan Shira & Associates.
Presently, Indian companies face limitations when seeking listings on foreign exchanges, often relying on depository receipts — negotiable financial instruments issued by depositary banks that represent shares of companies. Although this approach allows access to international investors and capital from foreign bourses, in 2020, New Delhi considered allowing primary listings on foreign exchanges. However, due to opposition from nationalist groups, the proposal was suspended, and the focus shifted to reinforcing India’s domestic capital markets.