The Securities and Exchange Board of India (Sebi) has proposed changes to the SME initial public offering (IPO) framework, including setting a ₹1,000 crore market-cap threshold for exclusive listing on the SME platform. The consultation paper issued on Wednesday also suggests easing exit rules and lowering underwriting costs for SMEs, aiming to refine the rules for this growing segment.
Under the new proposals, companies with a post-issue market capitalization up to ₹1,000 crore must list exclusively on the SME platform. Firms valued between ₹1,000 crore and ₹4,000 crore could opt to list on the SME segment but would face stricter financial reporting requirements, such as adopting Indian Accounting Standards (Ind AS) where applicable. Additionally, Sebi plans to raise the minimum average operating profit requirement to ₹3 crore annually over the preceding three years, up from the current ₹1 crore in two of the last three years.
These changes come as the SME platform has expanded significantly, with 1,496 entities listed as of 31 July 2026, including those that migrated to the main board. SME IPOs have cumulatively raised ₹40,222 crore, and the market capitalization of listed entities stands at ₹4.71 trillion. The revised framework aims to balance investor protection with easing access for SMEs to capital markets, reflecting the segment's growing importance in India's financial ecosystem.
The consultation paper also proposes lowering lock-in periods for pre-IPO investors and reducing underwriting costs, measures designed to improve liquidity and reduce listing expenses. The regulator is seeking feedback on these proposals before finalizing the rules.