Indian Depository Receipt (IDR)

The idea

An Indian Depository Receipt answers a neat question: how can an Indian investor own a slice of a foreign company without opening an overseas account or dealing in foreign currency? An IDR is a rupee-denominated instrument, issued by a domestic depository against the underlying shares of a foreign firm, and listed on Indian exchanges like the NSE and BSE.

It is the mirror image of the ADRs and GDRs through which Indian companies list abroad. Each IDR represents a fixed number of the foreign company's shares, letting investors trade them in rupees during Indian market hours.

The one real-world test

The concept got exactly one major outing. In 2010 Standard Chartered became the first and only company to issue IDRs in India, raising capital and listing the receipts on the BSE and NSE. It was billed as the opening of a new market.

It did not last. By 2020 Standard Chartered terminated the programme and the IDRs were delisted, with the underlying shares sold on the London Stock Exchange and proceeds returned to holders. The reasons cited were telling: an unfavourable regime around taxation, restricted fungibility into the actual foreign shares, and the high cost of disclosure and listing.

Why it never took off

The structural problems doomed it. Investors could not freely convert IDRs into the foreign shares, taxation was unattractive compared with direct equity, and there simply was not enough liquidity to make the instrument compelling.

For today's Indian investor, the IDR is largely a historical curiosity. Those seeking foreign equity exposure now have cleaner routes, the RBI's Liberalised Remittance Scheme for direct overseas investing, international mutual funds, and global ETFs. The IDR story is a useful reminder that a well-intentioned structure can still fail if the tax and regulatory plumbing around it does not work.