Why India's Offshore Clampdown Irks Global Markets

India’s three national exchanges stunned the investing world on a Friday night in February when they jointly announced they were going to cut ties with their foreign counterparts. This was effectively an attack on offshore hubs like Singapore and Dubai and raised questions about how India fits in with global finance. Investors warned that the standing of one of the world’s biggest emerging markets in global indexes could be in jeopardy.

Like many other Asian nations, India is trying to find ways to maximize trading at home and limit the outward flow of money across its border. India is also trying to boost trading in a tax-free zone known as Gift City, which was built in Gujarat, the home state of Prime Minister Narendra Modi.