Homebound startups ignore IPO chill

Even as several initial public offering (IPO)-bound technology companies reassess launch timelines amid the war in West Asia, one critical element of listing preparation—shifting their corporate domicile back to India—remains largely unaffected.

- Abhinaba Saha

Mint’s analysis of EY data shows that nearly 20 Indian tech startups have either shifted, are shifting, or are considering shifting headquarters back to India ahead of planned listings. Of these, 1 have completed the restructuring or are in the process of it, signalling a structural trend among India’s new-age tech IPO pipeline.

These companies were founded in India but chose Singapore or US holding structures to tap global capital, regulatory flexibility and overseas listing, according to experts.

Prominent startups, including Flipkart, PhonePe, Razorpay and Zepto, have shifted their holding companies back to India from Singapore and the US ahead of their listings.

“There are some tax implications for companies shifting back, as they may lose the ability to ‘carry forward’ previous years’ business losses to offset future taxable profits, according to tax experts.

Further, capital gains tax on existing investors applies if the shift is made via a share swap, in which foreign shareholders exchange their shares for shares in the Indian entity. For instance, PhonePe's investors, led by Walmart, reportedly paid ₹8,000 crore in taxes to complete its 2022 relocation.

Tax liabilities are funded through internal accruals.