Indian stock trading and mutual fund startup Groww recently announced that it paid a hefty $159.4 million in taxes as it made the decision to shift its base from the U.S. back to India. This move is in line with the trend of nearly a dozen Indian startups relocating their headquarters to India from countries like the U.S. and Singapore. The main motivation behind these relocations is to adhere more closely to Indian regulations and pave the way for potential IPOs within the country.
In recent times, the IPO market in India has been thriving, unlike the subdued scenario in the U.S. and other developed markets. The country has witnessed a significant uptick in the number of public offerings, with close to 70 IPOs taking place in the first nine months of 2024 alone. This figure marks the second-highest number of offerings in a calendar year on record, indicating a robust IPO environment in India.
A key driving factor behind the decision of startups to return to India is the promise of improved analyst coverage, even for companies with valuations below $2 billion. This enhanced coverage plays a crucial role in attracting institutional investors, thereby boosting the overall appeal of these startups. Over the past decade, a large number of Indian startups, many of which have received backing from accelerator Y Combinator, had chosen to establish their headquarters in the U.S.
The trend of Indian startups repatriating back to their home country underscores the changing dynamics of the global startup landscape. With India emerging as a favorable destination for IPOs and offering better growth prospects, these startups are making strategic decisions to realign themselves with the Indian market. This shift not only impacts the startups themselves but also has implications for investors and the broader startup ecosystem.
As more Indian startups follow in the footsteps of Groww and make the move back to India, it is expected that the country’s startup ecosystem will continue to witness significant growth and evolution. The influx of these startups can potentially contribute to the development of a more vibrant and dynamic entrepreneurial environment in India, further solidifying its position as a key player in the global startup arena.
