ADRs and GDRs Explained: How Indian Companies List Shares Abroad

Last Reviewed and Updated: 17 Aug 2026

Search for Infosys on an American brokerage app and a listing shows up on the New York Stock Exchange, quoted in dollars, trading during US market hours, alongside Apple and Microsoft. Infosys did not list a second, separate company in the United States. What trades on the NYSE is an American Depositary Receipt, a US listed instrument that represents shares of the same Infosys that trades in rupees on the NSE and BSE back in India.

A handful of large Indian companies, mostly from an earlier generation of overseas fundraising, are accessible to foreign investors this way, either through American Depositary Receipts in the United States or Global Depositary Receipts on exchanges like London. The mechanism behind both instruments is similar, the regulatory journey that brought them to their current form in India has been long and at times stalled, and understanding how they actually work clears up a fair amount of confusion about what an investor is buying when they hold one.

An American Depositary Receipt, or ADR, is a negotiable certificate issued by a US depositary bank that represents a specified number of shares in a foreign company. The depositary bank holds the actual underlying shares, through a custodian in the company's home market, and issues receipts against them that trade on a US exchange or over the counter, priced and settled in US dollars rather than the home currency.

An ADR is not a separate class of stock with different rights from the underlying share. It is a wrapper, a US dollar denominated, US traded claim on shares that continue to exist and trade in their home market at the same time. Each ADR represents a fixed ratio of underlying shares, commonly one ADR to one, two, or sometimes more ordinary shares, depending on how the program was originally structured.

Term	What It Means	Why It Matters
ADR	A US dollar denominated receipt representing shares of a foreign company, traded on a US exchange	Lets American investors buy a foreign stock through a familiar, dollar settled instrument
GDR	A similar depositary receipt structure, typically listed on exchanges outside the United States such as London	Allows a company to raise capital from international investors beyond just the US market
Depositary bank	The bank that issues the receipts abroad and holds the relationship with the underlying custodian	Acts as the intermediary that makes the foreign shares tradable overseas
Domestic custodian	A bank in the company's home market that physically holds the underlying shares	Ensures every receipt issued abroad is genuinely backed by real shares at home

A Global Depositary Receipt works on essentially the same principle as an ADR, with the main difference being where it is listed and who it is marketed to. While an ADR is specifically structured for the United States market and US regulatory requirements, a GDR is typically listed on an international exchange outside the United States, most commonly the London Stock Exchange, and is often marketed to institutional investors across multiple jurisdictions simultaneously rather than being tied to a single national market.

In practice, a number of Indian companies that raised capital overseas in the 1990s and 2000s chose the GDR route specifically because it offered access to a broader pool of European and Asian institutional capital without the more extensive ongoing disclosure obligations that a full US listing through an ADR program typically demands.

An ADR or a GDR is not a different company or a different class of share. It is a dollar or other foreign currency denominated claim on the same underlying equity that already trades at home, wrapped in a structure that makes it tradable on a foreign exchange.

A sponsored depositary receipt program is one the company itself initiates and actively participates in, entering into a formal agreement with a depositary bank, bearing the associated costs, and typically providing the same financial disclosures to receipt holders that it provides to shareholders in its home market. Most well known Indian ADR and GDR programs are sponsored.

An unsponsored program, by contrast, can be created by a depositary bank on its own initiative, without the company's direct involvement, based purely on demand from investors wanting exposure to that stock through a depositary receipt structure. India's regulatory framework has, at various points, permitted limited scope for unsponsored programs, though sponsored programs remain the dominant structure for any meaningful Indian listing abroad.

Access to a deeper pool of foreign capital is the most direct motivation. A US or European institutional investor with mandates restricting them to securities traded on familiar, regulated exchanges in their own market may be unable or unwilling to buy shares directly on the NSE or BSE, but can readily buy an ADR or GDR settled through their usual custodial infrastructure.

Beyond capital access, a foreign listing raises a company's visibility and credibility with an international investor base, can serve as a recognised currency for cross border acquisitions, and in some cases offers Indian promoters and existing shareholders a route to partially monetise or diversify their holdings into a foreign currency instrument without requiring every buyer to set up direct access to Indian markets.

For an Indian company, an ADR or GDR program is less about raising money once and more about building a permanent bridge to a pool of foreign institutional capital that would otherwise find the home market difficult to access directly.

Depositary receipts from Indian companies operate under a framework that has gone through several distinct versions. The original Foreign Currency Convertible Bonds and Ordinary Shares Through Depository Receipt Mechanism Scheme of 1993 governed the earliest wave of Indian ADR and GDR issuances.

This was replaced by the more liberal Depository Receipts Scheme of 2014, which broadened the framework to permit issuance against any permissible security and, notably, allowed even unlisted Indian companies to issue depositary receipts for the first time.

Despite this liberalisation, new issuances slowed considerably because several operational details, including the precise roles and responsibilities of depositaries and custodians, were left unresolved under the 2014 scheme. SEBI addressed this with a detailed circular in October 2019 that set out a fuller operating framework, though it also narrowed eligibility back to companies already listed on a recognised Indian stock exchange.

That 2019 framework also expanded the list of permissible jurisdictions to include India's own International Financial Services Centre, paving the way for depositary receipt structures connected to GIFT City alongside the more traditional US and European venues.

Framework	Key Feature	Practical Effect
1993 Scheme	The original framework governing early Indian ADR and GDR issuances	Set the foundation but with comparatively limited flexibility
2014 Scheme	Allowed issuance against any permissible security and by unlisted companies	More liberal on paper but left key operational details unresolved
2019 SEBI Circular	Detailed operating framework, restricted again to listed companies	Restarted meaningful clarity for sponsored DR programs by listed companies
IFSC inclusion	GIFT City added as a permissible jurisdiction for depositary receipts	Opened a domestic, India based venue as an additional listing route

• Currency exposure is built in: an ADR or GDR is priced in a foreign currency, so its value to an Indian investor moves with both the underlying stock's performance and the rupee's movement against that currency.

• Price can diverge from the home listing: while arbitrage generally keeps an ADR or GDR price closely aligned with the underlying share's home market price adjusted for the conversion ratio and exchange rate, gaps can open up due to time zone differences, liquidity differences, or restrictions on conversion between the two forms.

• Dividends arrive net of withholding tax and conversion costs: dividend payments on the underlying shares are converted into the receipt's currency and distributed to holders after applicable Indian withholding tax, which is a meaningfully different cash flow experience than holding the ordinary share directly.

• Voting rights typically pass through indirectly: most depositary agreements allow receipt holders to instruct the depositary bank on how to vote the underlying shares, but this is a layered process rather than direct voting, and the exact mechanics vary by program.

• Liquidity can be considerably thinner than the home listing: many Indian ADR and GDR programs trade in much smaller daily volumes than the underlying stock's home market listing, which can widen bid ask spreads for an investor looking to trade actively.

Disclaimer

Disclaimer: This article is for educational purposes only and does not constitute investment advice. The description of ADR and GDR mechanisms and India's depositary receipts regulatory framework reflects the rules as understood in June 2026 and is subject to amendment. Readers should review the specific terms of any depositary receipt program they are considering and consult a qualified financial adviser before making investment decisions.