This article discusses the present, nascent state of the depository receipt issuance by Indian companies and its potential. It attempts to identify what needs to be done by the issuers and regulators, both in India and the United States.

Depository Receipts (DR) are a type of negotiable (transferable) financial security that can be traded on a local stock exchange, representing ownership of shares in companies of other countries. The popular Depository Receipts like American Depository Receipts (ADRs) and Global Depository Receipts (GDRs) have been offering companies, investors and traders global investment opportunities since the 1920s. An ADR is a stock which can be traded in the United States, representing a specified number of shares of a foreign company. ADRs are bought and sold on the American stock exchanges. They are issued and sponsored by an investment bank in the US. Depository receipts that are traded on the stock exchanges in other parts of the globe are called Global Depository Receipts (GDRs). These are commonly listed on the European stock exchanges, such as the Luxembourg and London Stock Exchange or on the Asian stock exchanges, such as the Dubai and Singapore Stock Exchanges. Both ADRs and GDRs are usually denominated in US dollars. When a company lists its shares on a foreign stock exchange, after fulfilling the requirements set forth by the foreign stock exchange as well as the Government and the domestic central bank, a depository receipt is created.

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