Abstract: Financial market in any country plays a pivotal role in the growth of economy and meeting country’s socio economic goals. This is an important constituent of the financial system, given their role in the financial intermediation process and capital formation of the country. The importance of the financial market cannot be underemphasized for developing economy like India which needs significant amount of capital for the development of strong infrastructure. Globally, Shariah finance has been drawing attention from industry practitioners and regulators alike as an increasingly main stream offering. India is one of the largest Islamic geographical markets in the world as Muslims constitute about 13.40% of India’s total population. The demographic factors coupled with the overall growth in the Indian financial services sector, present significant opportunity for global players to build and participate in a potentially large market for Islamic finance. However, the key to doing Shariah finance in India is to marry the existing Indian regulations with the Shariah law principles, without coming foul of either of them. Shariah (Islamic Law) does not permit Muslims to invest in companies that derive significant benefits from interest since usury is considered sinful under Islamic faith. Actually, it can be said that at the origin of moral investments lie perspectives of monotheistic religions towards commercial activities. Companies should not derive benefits from sale of products deemed harmful like alcohol, tobacco and weapons. This is the underlying principle why a separate index of equities called the Shariah index was formed to tap the ever increasing Islamic investors in businesses across the world. The aim is to enable the Islamic financial world to invest in Shariah-friendly businesses across the world.