The recent decision of Indian startup Groww to pay $159.4 million in taxes for shifting its domicile back from the U.S. to India marks a growing trend among Indian startups which are looking to realign with domestic markets. It is a financial maneuver and simultaneously it also reflects a narrative that Indian startups are seeking to tap the Indian capital market.
Many Indian startups have chosen to establish their headquarters in the U.S. and Singapore. It was simple for them to access larger pools of capital and global investors. The strategy today seems to be different and especially as the Indian IPO market emerges as a hotbed of activity.
The Indian IPO segment has been on fire in 2024. Nearly 70 IPOs were witnessed in the first nine months. The country is experiencing its second-highest number of public offerings on record. The IPO markets in the U.S. and other developed regions have remained largely subdued. This means India is now an attractive destination for companies seeking public capital. The decision of Groww to relocate is a signal that Indian startups are recognizing the immense potential back home.
One of the key drivers is the promise of better analyst coverage for companies which are valued under $2 billion. The coverage is crucial for startups and particularly for those which are eyeing institutional investors. A domestic IPO provides better visibility and also enables closer compliance with Indian laws.
India now is no longer just a talent hub, but it is also quickly becoming a capital hub. The tax implications seem to be outweighed by the long-term benefits of better access to local investors and a stronger foothold in the domestic market.
The move of Groww is just the tip of the iceberg.
