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ICEA in discussions with funds to establish exchange for high-tech Indian companies

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In Short:

The electronics industry in India is considering setting up a sub-exchange similar to the Shanghai Stock Exchange STAR Market, to provide high-tech companies with better access to capital markets. The discussions are being led by industry body ICEA. The success of such an exchange will depend on SEBI’s regulatory approach, and industry experts suggest modeling it on the SME exchange. The STAR Market in Shanghai has seen significant growth in the past two years.

The electronics industry is in talks with fund houses to establish a sub-exchange similar to the Shanghai Stock Exchange STAR Market. The SSE STAR Market, known as Shanghai’s Nasdaq, provides Chinese high-tech and emerging sector companies with increased access to capital markets. This initiative in India coincides with the government’s goal of achieving $1 trillion in electronics production within the next five years.

Discussions Led by ICEA

The India Cellular & Electronics Association (ICEA) is spearheading the discussions for setting up this exchange. ICEA founder, Pankaj Mohindroo, stated, “We have initiated discussions to establish an exchange similar to the SSE STAR for high-tech companies in semiconductor product design and other emerging technologies to attract capital from investors.”

Mohindroo confirmed that ICEA has engaged in talks with various fund houses, although specific names were not disclosed. He emphasized the need for industry capacity building, including the development of the sub-exchange concept.

SEBI’s Approval Crucial

The Securities and Exchange Board of India (SEBI) approval will be essential for the establishment of the exchange. Industry experts suggest that SEBI’s regulatory framework will shape India’s potential version of Nasdaq.

Anand Lunia, a partner at India Quotient, believes that the success of the exchange will depend on SEBI’s approach towards listing norms, especially for high-tech companies seeking public funding.

Significance of STAR Market

According to the Center for Strategic & International Studies (CSIS), the STAR market in Shanghai has experienced substantial growth, with private enterprises dominating listings and market valuation. The majority of companies listed on the STAR market operate in industries aligned with China’s Made in China 2025 initiative.

CSIS highlighted that these companies focus on advanced IT equipment, bio-medical devices, and electric/power equipment, aligning with Beijing’s strategy of financing high-tech and strategic sectors.

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