Indian Startups Reverse Flip: Shifting Legal HQs Back to India

After years of incorporating overseas, Indian startups are increasingly relocating their legal headquarters back to India. Companies such as Razorpay, Udaan, Pine Labs, and Meesho are reversing their earlier decisions, while Zepto has already completed the transition. This trend, known as "reverse flipping", is being driven by improved IPO prospects, regulatory simplifications, and India's strong economic growth.

The process of shifting domicile, however, is complex, requiring multiple regulatory approvals and significant tax payments. Despite these hurdles, India's evolving capital market is providing a strong incentive. Alok Bathija, Partner at Accel, highlighted the advantage of listing in India, stating, “while a software firm with $50-$60 million in revenue can now list in India, a similar listing in the US would require nearly $500 million in revenue.” With Indian stock markets offering higher valuations and greater accessibility, an increasing number of startups are making the move.

Beyond IPO ambitions, relocating headquarters to India simplifies compliance, particularly for fintech firms. As these companies generate most of their revenue domestically, aligning with Indian regulations offers operational benefits. Amit Nawka, Partner at PwC, emphasized, “Fintechs play a crucial role in India's financial landscape and benefit from being headquartered locally.”

The availability of domestic funding is another major factor driving the shift. Previously, startups incorporated abroad had easier access to global investors, especially from US-based venture capital firms. However, the rise of domestic venture capital and family offices is bridging this gap. Siddarth Pai, co-chair at the Indian Venture and Alternate Capital Association (IVCA), noted, “Not just the IPO-bound startups, but a whole host of other startups are looking to flip back to India, especially those in regulated areas.” He added that being headquartered in India makes business expansion and regulatory approvals easier, particularly when overseen by institutions like the RBI or SEBI.

According to industry estimates, over 70 startups—including at least 20 key ecosystem players—are currently in the process of shifting their headquarters to India. However, around 500 Indian startups remain domiciled abroad, primarily in the US and Singapore. One of the most high-profile returns was PhonePe, which paid Rs 8,000 crore in taxes to move its registration from Singapore to India.

Recognizing this shift, the Indian government has simplified the process. Previously, an overseas startup merging with its Indian entity required clearance from the National Company Law Tribunal (NCLT), a lengthy procedure. Now, only approvals from the government and the RBI are required, expediting the transition.

Meanwhile, the surge in Indian tech stocks has dispelled the notion that startups must list on NASDAQ for high valuations. “India is one of the most robust IPO markets globally. In the last year alone, India had the highest number of IPOs globally, and second in value to the US,” said Varun Malhotra, Partner at Quona Capital. In 2024, India recorded 327 IPOs, surpassing the US (183), Europe (125), and China (98).

For startups like Razorpay, shifting back to India was a logical step. The company is paying over $100 million in taxes for the transition, but CEO and co-founder Harshil Mathur sees it as a long-term investment.