Homecoming Season: Pine Labs, Udaan, Meesho Looking To Move Domicile To India

Singapore-based Pine Labs, Udaan and the US-based Meesho are looking to move their respective domicile to India.

Pine Labs is looking to seek board approval this week to move its parent company from Singapore to India, ET reported citing sources. Meanwhile, Udaan is considering a similar move given its plans for an initial public offering (IPO) in the next 12-18 months, the sources said.

The PoS devices maker had started work on an IPO in late 2021 but shelved its plans due to volatile market conditions. According to the report, Pine Labs is looking to make the necessary filings for flipping its parent company back to India after receiving board approval on the matter.

Pine Labs’ reverse flip, which it might complete in 2024 itself, will depend on regulatory approvals.

Meanwhile, the report said that while Udaan is considering moving its holding company to India, it is also keeping its options clear for an overseas listing through a Singapore entity.

Meesho, on the other hand, has been looking at options to bring its US-based holding entity, though it has yet to come to any decision on the matter.

Reverse Flipping Continues

There have been a couple of key drivers that are giving major Indian startups based abroad to consider shifting their domicile back to India.

Startups have mainly set up overseas bases for easier funding and due to supportive tax policies. Over the past few years, the Centre has been working on new guidelines for improving regulation. For example, the government is likely to ease some of the tax burden on the redomiciling of businesses in India this year, which might prove to be a big incentive.

If the government does ease up taxation norms for companies looking to redomicile to India, it would lead to more foreign-headquartered Indian startups considering reverse flipping. For instance, Walmart had to shell out an enormous $900 Mn in retrospective taxes before PhonePe could relocate from Singapore to India.

Many companies are also looking to come to India before they go for an IPO, which is said to be the case for Udaan as well. Those aware of Meesho’s plans said the unicorn is contemplating what would be the best option, given that it is an ecommerce firm and not a regulated entity like its fellow Y Combinator-backed companies Razorpay and Groww.

While for ecommerce startups it might be a bit easier, fintech companies might have their work cut out for them. Groww has reportedly applied to the National Companies Law Tribunal (NCLT) to shift its base from the US to India, while Razorpay is also exploring a similar strategy. Pine Labs will have to go through a similar process to move its domicile to India, which might take months to conclude.

Despite the challenges, India continues to be a lucrative enough market for startups to make the return journey. For the Indian government, redomiciling of startups is seen as a priority given the amount of value it would retain within the Indian economy.