With the launching of the Indian Depositories Receipts (IDRs), the investors might see many of the well-known companies coming and listing here.

The Securities and Exchange Board of India (SEBI) proposes to introduce Indian Depository Receipts (IDRs) in the domestic capital market in 2007. Some of the biggest companies in the world are likely to file for IDRs in India in the next 12-18 months.

It is quite an undisputable fact that the era of globalization and integration has opened up many new market opportunities for India. Post liberalization, Indian companies are able to access global markets to raise funds through depository receipts like American Depository Receipts/Global Depository Receipts (ADRs/GDRs). Now, in yet another stride towards globalization, Indian equity markets are gearing up to soon float Indian Depository Receipts (IDRs) positively in the year 2007. This move will also provide yet another avenue for Indian investors to share the wealth of foreign companies.

IDRs are the financial instruments which shall permit foreign companies to raise funds from Indian markets by offering equity and listing on Indian stock exchanges. These are mirror images of GDRs and ADRs which would work other way round by allowing companies to mobilize funds from American and European markets.

To initiate the process of issuing IDRs, foreign companies will have to safe keep the actual underlying shares with an overseas custodian that has to be a foreign bank with a business in India. To act as a custodian, the company is also required to get the approval from the Finance Minister of India. Then the authorized custodian will instruct the Indian registered depository to issue IDRs. These IDRs can be issued to Indian investors and qualified institutional buyers. However, FIIs and NRIs are also eligible to invest in IDRs, but only with the consent of the Reserve Bank of India (RBI).

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