Bigger India
India wants to stop the export of its financial markets, or does it
The policy missteps are not restricted to equities. Both over-the-counter and exchange-traded markets for the dollar-rupee have gradually moved offshore
In theory, theory and practice are the same; in practice, they are not—or so goes the saying. This dichotomy is starkly seen in India’s policy missteps when it comes to developing vibrant and liquid financial markets onshore.
The government’s stated policy is to curb the export of financial markets to offshore centres such as Singapore and Dubai. In fact, this was one of the reasons it promoted an international financial services centre (IFSC) in Gandhinagar. But in practice, recurring policy mistakes continue to help these offshore centres gain at the expense of onshore markets.
After handing over large chunks of the exchange-traded index futures and dollar-rupee futures markets to Singapore and Dubai, India has set things up nicely for these centres to seize a sizeable share of the single stock futures market.