The Economic Survey 2023 has suggested that Indian start-up companies are reverse flipping or re-domiciling to India. Earlier, start-ups used to consider shifting their headquarters abroad (especially to Singapore) as a feasible option. However, things have taken a gradual turnaround now. 

Reverse flipping means shifting the headquarters of the business enterprises from abroad to India. Earlier companies used to domicile their headquarters abroad to get the ease of taxation. Having offices abroad also helped start-ups to raise money from global investors at a better valuation. According to a report by India Briefing, more than 8,000 Indian start-ups have registered themselves in Singapore since 2000.  Better protection and enforcement of intellectual property (IP) and tax treatment of licensing revenue from IP can be counted as the main reasons behind registering. 

However, things are taking a U-turn in recent times. Indian fintech decacorn PhonePe recently shifted its headquarters to Bengaluru from Singapore. 

The increasing nature of the PE (private equity) and VC (venture capital) ecosystem in the country is helping start-ups re-domiciling their headquarters. Amid funding winter, VCs and PEs invested nearly $33 billion in funding across 1,076 deals in the first half of the calendar year (CY) 2023, better than $23.4 billion in CY 2019. Additionally, multiple companies are eying to be listed in the Indian Stock Market. This can be considered in the case of PhonePe. After the reverse flipping, experts suggested that the company may initiate its initial public offering (IPO) in the coming years. 

To accelerate the reverse flipping the Survey has suggested multiple steps to stakeholders and regulatory bodies. It has proposed a simplification of ESOP (employee stock ownership plan) and other taxation. Additionally, it has also suggested making the capital flow easier and developing incubation programmes for better funding landscapes.