India is simplifying the process for startups to move their bases back to the country and capitalize on the booming IPO market. The regulatory change removes a compliance step involving the National Company Law Tribunal, allowing companies to complete the “reverse flip” in just 3-4 months, down from 12-18 months previously. Many Indian startups, such as Razorpay, Pine Labs, and KreditBee, are in advanced stages of completing their reverse flip to align with local listing norms.
Others, including Zepto, Eruditus, and InMobi, are working to finish the process in the coming months as they prepare for their IPOs. Harshil Mathur, co-founder and CEO of Razorpay, said, “India is a home market and a place where everybody knows and understands us. From a listing perspective, it makes sense to be in India.” The U.S.-domiciled online payments firm, valued at $7.5 billion, is looking to shift to India.
According to LSEG data, IPOs in India have raised $9.17 billion in the first nine months of this year, nearly double compared to the same period last year.
India’s streamlined reverse flip process
This surge in IPO activity makes India a rare bright spot for equity capital raising in the Asia-Pacific region.
Mehul Shah, a partner at corporate law firm Khaitan & Co., noted, “With the IPO market thriving, a reverse flip makes sense. Moreover, the streamlined merger process, designed to facilitate swift and efficient scheme approvals without court intervention, further supports this strategic move.”
The move back to India is also influenced by the country’s requirement that only local companies list on its exchanges and its ban on dual listings. Additionally, India’s central bank and other regulators favor local firms over their foreign counterparts for essential operational licenses needed by fintechs.
Despite the supportive changes, India is unlikely to offer concessions on capital gains taxes. Commerce Minister Piyush Goyal stated that Indian startups shifting back home would still need to pay taxes, saying, “Why they want to come back is not an altruistic motive. They want to list in India because here’s where you get the valuations.”
The regulatory overhaul makes capital access simpler for tech firms by bypassing court mandates, aligning with India’s investment-friendly atmosphere.
As domestic listings become more straightforward, Indian startups returning from abroad can secure funds more effectively and enhance valuations in India’s robust market, making the country a more competitive growth hub on the global stage.
