Reverse flipping: why startups are moving their base back to India

Reverse flipping means undoing an earlier flip. To understand it, start with the flip. Many Indian founders, especially from 2010 to 2020, set up the main company outside India, in the US, Singapore or the Cayman Islands. The Indian company became a subsidiary. Global investors took shares in the foreign parent, which was easier for them under their own laws and tax rules.

In a reverse flip, the structure is turned around. The shareholders of the foreign parent end up holding shares in the Indian company directly, and the foreign parent is merged away or closed. After the flip back, the Indian company sits at the top. This is sometimes called ghar wapsi or desh wapsi, meaning a return home.

The biggest reason is the stock market. A company that wants to list on the Indian exchanges through an IPO generally needs to be an Indian-incorporated company at the top of the group. Investors in a listed company also prefer a simple structure. The guide on what an IPO is explains the route.

Other reasons add up. Regulators in finance and payments prefer that the controlling company is Indian, and the RBI's data rules for payments push companies to keep data and control at home. Many large Indian consumer markets are the main source of revenue, so the foreign parent no longer adds much. Domestic investors, such as mutual funds and Indian venture funds, find an Indian parent easier. And Indian capital markets have grown to a size where listing at home is attractive.

Well-known companies that have publicly moved their parent to India include Groww, PhonePe, Razorpay and Zepto, and Flipkart has been reported as completing its own move in March 2026. Reports differ on the details of each deal, so read the company's own announcements.

There are a few paths. The most common today is a merger: the foreign parent merges into its Indian subsidiary, and the shareholders of the parent receive shares in the Indian company in the same proportion. Another path is a share swap, where the investors transfer their shares in the foreign parent to the Indian company in exchange for new Indian shares. A third is for the Indian company to buy the assets of the parent.

In each path the steps are similar. First, value both companies. Second, get the board and shareholder approvals, including investor consent, since investors have rights over such changes. Third, get the approvals from regulators, which include the RBI for the cross-border steps under FEMA. Fourth, complete the court or government step for the merger, and fifth, file all the paperwork with the tax department. Foreign laws also apply to closing the parent, and a US company, for instance, must follow its state law and file its own tax returns.

For years, a cross-border merger meant going to the National Company Law Tribunal (NCLT), a process that could take most of a year or longer. In September 2024, the Ministry of Corporate Affairs changed the merger rules so that a foreign holding company can merge into its wholly owned Indian subsidiary through the fast-track route. In this route, the Regional Director of the Ministry confirms the merger, without a hearing at the NCLT. Prior approval of the RBI is still needed.

Later amendments in 2025 are reported to have widened the cases that qualify. The NCLT has also kept approving individual reverse flips, such as the one reported for Zepto. Law firms point out that the wording of the rules leaves some uncertainty about when the fast track is compulsory, so companies often take advice on which route to use. Timelines are reported as a few months for the fast track, against much longer for the tribunal route.

Cost is the main hurdle, and it is mostly tax. The government has not waived tax for companies that flip back. Depending on the structure, the company or its shareholders may pay tax in India on gains, tax in the country of the foreign parent on exit, stamp duty on the transfer of shares, and fees for lawyers, valuers and auditors.

Large sums have been reported in the press. For example, reports say Groww paid roughly $160 million in US taxes on its move and that PhonePe and Razorpay paid large tax bills. Reports differ on the exact sums and on who paid which tax, so treat these as indications, not audited facts. A smaller startup has a smaller bill, but even a modest company may find the legal work costly. Another worry is that losses built up in a company may be limited after a change in ownership. Tax advice is essential.

A startup with no plan for an Indian listing and with most of its customers abroad may be better off staying where it is. A company whose investors are mainly from the US may want a US parent for its own reasons, such as the stock option rules there. The cost and time of a flip are real, and a half-done flip is risky.

Founders usually flip when three things line up: a clear IPO plan within a few years, a business mostly in India, and investors who agree to the plan. For employees, the flip can change the company whose shares their ESOPs refer to, so ask how your options will be handled. The guide on ESOPs explained covers the basics.

This guide is general information, not legal or tax advice. Rules and costs differ for each structure, so check with a lawyer and a chartered accountant.