India said to plan easier rules to boost micro-cap listings
Sebi is considering sweeping SME IPO reforms to broaden eligibility, boost investor participation and reduce listing costs. Proposed changes include allowing companies valued up to Rs 4,000 crore to list on SME platforms, removing minimum trade sizes, and easing market-making and underwriting requirements. The regulator is expected to issue a consultation paper seeking public comments.
The Securities and Exchange Board of India (SEBI) is reportedly considering major changes to its rules governing micro-cap IPOs, aimed at boosting participation from tiny companies and investors alike. According to sources familiar with the matter, the regulator intends to permit companies with a market value of up to Rs 4,000 crore ($420 million) to utilize SME platforms for initial public offerings (IPO). Typically, companies valued under 5 billion rupees are listed on such platforms.
The proposal was discussed during the primary market advisory committee's meeting on Wednesday, with SEBI expected to release a consultation paper soliciting public feedback. However, SEBI did not respond to inquiries regarding the matter.
If implemented, these changes would represent the most significant overhaul of India's SME market since dedicated platforms were introduced in 2012. The plan follows the regulator's tightening of oversight over micro-IPO market in late 2023, triggered by concerns over pricing manipulation and fraudulent activities.
To date, India has witnessed nearly 100 such listings this year, compared to 267 in all of 2025. SEBI is contemplating raising the paid-up capital threshold for firms eligible to list on SME platforms from the current Rs 25 crore to Rs 1 billion. This move would give businesses valued between Rs 1,000 crore and Rs 4,000 crore the option to choose between an SME platform and the mainboard listing.
Additionally, SEBI is weighing the elimination of the minimum trade size requirement, which currently mandates trades in multiples of Rs 200,000. By allowing smaller quantities, the regulator aims to encourage investor participation. The existing rules require market-makers to continuously offer buy and sell quotes in SME shares, increasing costs for issuers and investment-banking fees. Currently, bankers charge an average of 5.3% of the amount raised for SME IPOs, compared to around 2.2% for mainboard offerings.
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