Seven streams of capital market reform

At FICCI’s CAPAM 2026 earlier this week, as policymakers, regulators, market participants, and professionals discussed the next phase of India’s capital market journey, what struck me was how much the debate has changed. India is no longer discussing how to build a credible capital market. It already has one. The question now is how to make it more competitive, predictable and responsive to the needs of a rapidly changing economy.

Prime Minister Narendra Modi’s reference to saptadhara, or seven streams of national strength, provides an apt framework for envisioning our next phase of development. The capital market must be one of the engines that power these streams. If India wants to become a leading economy, it needs a capital market that is not just deep and well-regulated, but also among the easiest and most to raise and invest capital and restructure businesses.

Our foundations are strong: world-class market infrastructure, improved investor protection, robust disclosure standards, and serious regulatory oversight. This gives us the confidence to think about the next stage of reform.

I believe we can make a meaningful difference in seven areas.

First, the primary market should have the same spirit of flexibility that increasingly characterises the secondary market. I earlier wrote about this in the context of what was described as the world’s largest IPO, the SpaceX offering. The important lesson was not simply the size of the transaction. It was the speed, flexibility, and efficiency with which an extraordinary transaction could move through the process. I am not suggesting every Indian IPO should be completed in 10 weeks. But we should ask a fundamental question: how do we ensure a good transaction takes only as long as is necessary to achieve the regulatory objective? Capital markets are dynamic. Flexibility is a component of efficiency, not a compromise. Regulation should protect investors and ensure integrity, but it shouldn’t turn time into a regulatory cost.

Second, we should simplify IPO disclosure requirements. Indian firms prepare audited financial statements under a rigorous accounting and regulatory framework. In many cases, these should form the core of IPO disclosure, supplemented by targeted reconciliation and enhanced disclosure where necessary. Requiring a separate, fully restated historical financial set can lead to significant costs and delay without necessarily giving investors proportionately greater insight. The objective should be more information that matters, not more paperwork. Investors need clarity, comparability, and material information, not multiple versions of the same financial history.

Third, pre-IPO convertible securities deserve greater flexibility. For outstanding convertible instruments, conversion timing should be brought closer to the start of the book-building process, allowing investors to see price discovery before deciding whether to convert. At present, the structure can require conversion before investors have visibility on the price the market is actually willing to pay. Price discovery is at the heart of a capital market. Regulation should facilitate it rather than force investors to make decisions without the benefit of that information.

Fourth, we should rethink the trigger for open offers in creeping acquisitions. If a promoter is already in control of a listed company, does an acquisition of over 5% in a year need to trigger a full open offer process when there is no change in control? Open offers protect public shareholders when control changes hands. But where control is already established, the same process may not always be proportionate to the underlying risk. The answer is not to weaken investor protection. It is to ensure the regulatory response is aligned with the economic reality of the transaction.

Fifth, there is considerable scope to reduce duplication in corporate restructuring approvals. A listed company merger can be examined by the stock exchanges, reviewed by Sebi, considered by shareholders and creditors, and then subjected to approval before the NCLT. There is nothing wrong with rigorous scrutiny. The issue is whether different institutions are sometimes examining substantially the same questions at different stages. Where the substantive regulatory objective is already being addressed, processes should speak to one another rather than repeat. In capital markets, delay has a real economic cost. A restructuring that makes commercial sense today may lose value if market conditions change before the transaction is completed.

Sixth, India must make onboarding easier for global investors. Indian firms compete not only with other Indian companies but with those listed in Singapore, London, New York, and Dubai for global capital. An international investor is therefore asking two questions: Is India an attractive market? Is India an easy market to operate in?

That distinction matters. Greater acceptance of globally recognised digital signatures, documentation, and onboarding systems for FPIs can make a meaningful difference. This is not about lowering standards, but about removing avoidable friction while preserving compliance and investor protection.

Seventh, India has done well in creating a framework that has allowed real estate investment trusts (REITs) and infrastructure investment trusts (InvITs) to grow while maintaining regulatory discipline. The next step should be to bring newer infrastructure models within the InvIT framework wherever appropriate and consider whether REITs and InvITs should operate under a framework more closely aligned with equity markets, including the takeover framework.

These seven ideas are an argument for better regulation for a more mature market. India should continue to protect investors, and insist on market integrity, transparency, and accountability. But regulation should also give businesses and investors enough flexibility to respond to changing markets, new financial structures, and global competition.

The ambition should be clear. We should build one of the most competitive capital markets, where an Indian company can raise capital efficiently, a global investor can enter without unnecessary friction, an entrepreneur can structure a transaction intelligently, and a company can restructure without repetition.

Disclaimer: The views expressed are the author’s own and do not reflect the official policy or position of Financial Express.