Why are startups like Zepto and Groww leading shift from US, Singapore to India?

ReverseFlipping:   Zepto , the quick-commerce firm, is to move its domicile from Singapore back to India. Quickly becoming a unicorn, the firm intends to increase its Indian presence and attract local investments. According to a spokesperson, the firm is currently in the process of relocation, pending regulatory sanctions. Sources indicate that this will be part of the strategy adopted by the company to convert into an Indian majority-owned business in 12-18 months from now, thus effectively meaning that the focus will again go on the domestic market. Recently Groww has paid $160 million in tax as the company has shifted its base from the US to India. The company is the first US-registered unicorn to shift its base from the US to India, others like Meesho, Razorpay are contemplating the same.  

The Reverse Flipping Trend

Zepto 's decision to reverse flip forms part of a trend that is shaping up among Indian startups. Eruditus, LivSpace, Groww, and Razorpay have already announced their plans to reverse flip. The new reverse flipping wave came on the back of PhonePe in October 2022, when co-founder Sameer Nigam said many unicorns were looking for reverse flips because of how new regulatory environments were impacting them.

A Business-Friendly Ecosystem

There are various drivers for this trend. According to experts, the efforts of the government of India to improve the business climate prevail with the changes in tax regulations and enhanced access to capital from private equity and venture capital. As given in the Economic Survey 2023, many startups are opting for this with the hope of cashing in on the burgeoning Indian market and its consumers.

For startups, since the head office was established in India, they can gain a better understanding of local market dynamics and consumer preferences. 
IPO Opportunities on the Rise. The Indian IPO market is maturing and becoming more accessible to startups that would want to go public. Companies like Swiggy are now preparing to list on domestic exchanges, which creates a positive sentiment among investors. With a growing appetite for IPOs, these startups are ambitious to capitalize on the favourable listing environment in India.

A Strategic Shift

This is indicative of the dynamic change in the startup landscape; strategically moving towards augmenting the potential of the Indian market, companies such as Zepto and Eruditus now return to India. Thus, with favourable tax policies and easy access to capital as well as a friendly regulative environment, this reverse flipping trend would most likely prevail and usher in a new era for Indian startups.