The World Development Report 2024 identifies the middle-income trap as a major challenge for emerging economies like India. This phenomenon occurs when stagnant productivity and weak innovation prevent an economy from advancing from middle-income to high-income status. With India aiming to become a developed nation by 2047, overcoming this trap is critical. At this crucial juncture, SEBI’s Innovators Growth Platform (IGP) could serve as a key mechanism to accelerate innovation and economic growth.
What is IGP
Previously known as the Institutional Trading Platform, the IGP is a dedicated stock exchange platform introduced by the Securities and Exchange Board of India (SEBI). It is designed to facilitate the listing and trading of securities for startups and high-growth, innovative companies in India. By offering easier access to capital, increased visibility, and new investment opportunities, IGP aims to support the country’s startup ecosystem. The relaxed compliance norms and streamlined listing requirements also make the platform attractive for emerging businesses.
However, despite its potential, IGP remains underutilized in India. As of now, no firms have been listed on the platform. In contrast, its global counterparts, such as China’s STAR Market and Hong Kong’s GEM, have seen significant success.
Challenges Hindering IGP’s Success
- Perceived Inferiority to the Mainboard
Many Indian startups view IGP as less prestigious than the mainboard. As a result, prominent Indian startups like Zomato and Paytm have opted for mainboard listings instead of IGP. Meanwhile, China and Hong Kong have successfully attracted mature, high-profile companies to their alternative listing platforms, strengthening market credibility.
- High Minimum Lot Size
The IGP imposes a minimum lot size of Rs. 2 lakh which is comparatively higher and has discouraged participation from retail investors. In comparison markets in UK, Singapore have no such restrictions which has allowed for broader investor engagement.
- Lack of Flexibility in Investment Terms
Unlike its international peers, IGP offers limited negotiation flexibility for venture capitalists (VCs). In China and Hong Kong, VCs can negotiate special rights—such as board representation and liquidity preferences—making these platforms more attractive for early-stage investors.
- Concerns Over Information Disclosure
Many startups hesitate to list on IGP due to concerns about publicly disclosing financial and strategic information, which could provide competitors with an advantage. Addressing these concerns through confidentiality provisions or phased disclosures could improve participation.
The Way Forward
To unlock IGP’s full potential, a multi-pronged approach must be adopted to address liquidity concerns, regulatory barriers, and investor awareness.
Encouraging greater participation from mutual funds, pension funds, and insurance companies can help boost liquidity and improve investor sentiment. SEBI can introduce a market maker mechanism, similar to those in AIM (UK) and NASDAQ First North (Nordics), where designated institutions provide liquidity by consistently offering to buy and sell shares. Lowering the minimum lot size to Rs.50,000 or below will make the platform more accessible to high-net-worth individuals (HNIs) and sophisticated retail investors. Creating an IGP Index to track the performance of listed firms and allowing indirect retail participation through mutual funds or ETFs can further enhance engagement.
To improve exit flexibility, SEBI should enable IGP-listed companies to migrate to the BSE/NSE mainboard with fewer restrictions once they meet profitability or revenue thresholds, making IGP a viable stepping stone before a mainboard listing. Additionally, raising awareness through roadshows and workshops will help startups understand the benefits of listing on IGP. Highlighting successful case studies post listing on IGP can further demonstrate the platform’s potential to drive startup growth.
By addressing these challenges, IGP can become a powerful catalyst for strengthening India’s innovation ecosystem, boosting productivity, and accelerating its transition to a high-income economy.
