Gift City examines Indian stock UDRS

The International Financial Services Centre Authority (IFSCA), the regulatory body overseeing GIFT City’s international financial services centre, is considering permitting unsponsored depository receipts (UDRs) for Indian shares, two people aware of the matter said.

- Pavan Burugula

This move would offer investors the opportunity to invest in Indian stocks and avail of tax benefits.

By introducing Indian UDRs, the International Financial Services Centre (IFSC) in Gift City aims to boost liquidity, attracting foreign funds seeking offshore alternatives to the Mumbai stock markets. The availability of Indian UDRs, coupled with significant tax benefits, is expected to bolster the attractiveness of IFSC, the people cited above said.

Currently, Gift City offers derivatives, debt products, and UDRs of foreign companies such as Apple and Google.

Depository receipts allow investors exposure to equities of foreign companies, with custodian banks facilitating the transactions by purchasing shares and issuing receipts. These receipts can be traded on designated stock exchanges, similar to regular shares. Sponsored depository receipts are initiated by companies themselves, while third parties introduce unsponsored depository receipts.