India said in March it would allow local firms to directly list abroad to better access foreign capital for growth, but the rules have yet to be decided. Currently only certain types of securities such as depository receipts are able to be listed in foreign markets, and only after the companies go public in India.

The new policy, aimed at helping local firms achieve better valuations, could be a shot in the arm for Indian unicorn start-ups valued at over $1 billion and Reliance’s digital unit which is eyeing a U.S. listing after raising over $20 billion from global names like KKR & Co.

But in recent weeks Indian officials told global investors and companies in meetings they were considering mandating a secondary listing for local companies on Indian bourses after they list abroad, five sources said.

The time period under consideration for such a requirement ranges from 6 months to 3 years, sources said.

A separate senior regulatory source in India said “dual listing was being considered by the (finance) ministry for sure,” but a final position on the matter has not been reached.

Japan’s SoftBank and an Indian payment firm it backs, Paytm, as well as Reliance and U.S.-based Sequoia Capital have conveyed to the government the secondary listing provision risks splitting trading volumes, hurting long-term valuations and raising compliance needs and costs, the sources added.

“To require companies to subsequently list in India will make these rules meaningless,” said a senior executive working at a global venture-capital firm.

SoftBank and Sequoia have invested in various Indian firms like ride-hailing company Ola and hospitality firm Oyo. Foreign listings could provide exits for such investors at higher valuations but also allow Indian firms, especially from the tech sector, to access specialised investors abroad who can better value their companies.

The rules are being drafted by the finance and corporate affairs ministries, in discussion with the capital markets regulator Securities and Exchange Board of India (SEBI), and will be finalised in coming weeks.

Spokespeople for SEBI and the two ministries did not respond to a request for comment. A SoftBank spokeswoman said “we never comment on confidential policy discussions”. Sequoia, Paytm and Reliance did not respond to requests for a comment.

GOING FOR GROWTH

Currently, Indian companies can list locally and then access foreign equity capital through instruments like American Depository Receipts (ADRs), a route used by India’s Infosys and ICICI Bank.

India is concerned that the upcoming policy change will mean that companies hunting for higher valuations through access to a wider group of investors, would choose to only list abroad, the sources said. That risks hitting the growth ambitions of Indian capital markets and depriving local investors of the wealth-creation opportunity.

“The government needs to balance Indian aspirations so that (domestic) investors can invest in these companies,” said Siddarth Pai, Founding Partner at Indian investment firm 3one4 Capital. “This is a trailblazing endeavour, if India plays its cards right.”

India’s equity market has a capitalisation of $2 trillion, compared with $39.3 trillion for the United States.

Between January and June this year, companies raised $23.6 billion via 63 initial public offerings (IPOs) on the New York Stock Exchange and Nasdaq, compared with $2.3 billion raised on Mumbai’s stock exchanges through 18 listings, data from Refinitiv showed.

Lobbying group USIBC, part of the U.S. Chamber of Commerce, has this week been seeking feedback on the plan from members in an e-mail saying “the hope is” there will be no dual listing requirement.

A 2018 SEBI report listed 10 possible foreign markets for overseas listings, including the United States and the United Kingdom.