For years, if an individual built a startup in India and wanted big global investors on board, everyone told the same thing: set up the main company somewhere else, usually Delaware or Singapore. The Indian operations would just report up to that foreign parent. This wasn’t founders being fussy. Investors genuinely liked Delaware’s courts and Singapore’s speed, and it made things like employee stock options and owning intellectual property simpler to manage. That trend has flipped, literally. Companies are now moving their parent company back to India. PhonePe did this in 2022, coming back from Singapore. Groww followed in 2024 from the US. Pine Labs, Zepto, Meesho, Razorpay, Udaan and KreditBee have either finished the same move or are somewhere in the process. People in the industry call this a reverse flip, and GIFT City has even given it a catchy name of its own: Desh Wapsi, or “coming home”. So what changed? Three regulatory shifts explain the reversal.
First, the paperwork got a lot easier. In September 2024, the government tweaked the merger rules so a foreign parent company can now merge into its Indian subsidiary through a faster process, skipping the National Company Law Tribunal altogether. Then, in the 2025 budget speech, the Finance Minister promised to widen this fasttrack option even further, and the rules were updated again in September 2025 to cover more kinds of companies. One still needs approval from the Reserve Bank of India under the cross-border merger rules, but the whole process moves faster than it used to. Second, taxes matter a lot here, and it is messier than officials would probably like to admit. Moving a company’s ownership back to India can be tax-free on the Indian side, but the country a startup is leaving often taxes it on the way out. Groww learned this the hard way: its move within India was tax neutral, but it still had to pay a $160 million tax bill in the US.
Ahead of the 2025 budget, startups had asked the government for full tax neutrality on these moves, plus easier rules for stock options and carrying forward past losses. The new Income Tax Act, which takes over from the old 1961 law starting in tax year 2026–27, keeps the old startup tax break alive. It used to be Section 80IAC; now it is Section 140. And angel tax, which used to scare off a lot of founders, has been scrapped entirely. Third, and this is the big one: GIFT City. Since 2023, the regulator running GIFT City has openly pushed for startups to come home, publishing a report literally titled Onshoring the Indian Innovation to GIFT IFSC. Companies set up there get a ten-year tax holiday out of a fifteen-year window, no GST, no minimum alternate tax, and since 2024 they can even list on international markets straight from GIFT City without listing in India first. Over a thousand companies are already registered there, including around sixty fintech firms as of late 2024, and the pitch is basically this: get perks similar to Singapore’s without actually leaving India. It is not all smooth sailing, though.
In February 2026, reports emerged that several companies, including PhonePe, Meesho, Razorpay, Pine Labs, Udaan and KreditBee, had actually paused their reverse flip plans. The reasons were a slump in tech stock valuations, jitters around software company earnings, and continued confusion over taxes. The process itself is still expensive and slow in practice: duplicate audits, transfer pricing studies, exit taxes owed abroad, and lawyers still arguing over how some of the newer merger rules should even be read. Still, the direction of travel is fairly clear. Between faster merger rules, tax incentives that survived the move to the new Income Tax Act, and GIFT City’s push to make India a real financial hub, the country has built something it never really had before: a genuine domestic alternative to flipping abroad. Whether this becomes the norm rather than the exception depends less on any single law and more on how deep India’s IPO markets get, and how predictable its tax system turns out to be over the next few years.
*The author is Assistant Professor of Law, Kirit P. Mehta School of Law, NMIMS (Deemed to be University), Mumbai.