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May 13, 2024

Flipkart Eyes Domicile Shift from Singapore to India Ahead of Potential IPO

In a strategic move with its eye on an upcoming initial public offering (IPO), Flipkart, the e-commerce giant owned by Walmart, is considering relocating its domicile from Singapore back to India. This shift, reported by industry insiders, could potentially provide significant tax benefits for the Indian government while also aligning with Flipkart’s long-term growth plans.

Currently valued at an impressive $33 billion, Flipkart Pvt Ltd operates as a holding company based in Singapore. However, as the company intensifies its efforts to achieve profitability and aims for a valuation of approximately $60 billion during its anticipated IPO, slated for 2025-2026, it is contemplating listing in India and other global markets, including the US. The decision to move its domicile to India is closely linked to these IPO plans.

While Flipkart had initially considered going public in 2022-2023, the plan was postponed due to financial considerations and global economic uncertainty. However, with India’s e-tailing sector poised for explosive growth, analysts predict a fivefold increase from $59 billion in 2022 to an estimated $300 billion by 2030. This growth is fueled by a rising number of value-seeking consumers in tier-2 and beyond cities embracing e-commerce.

Flipkart is riding this wave of growth, evident from the record 1.4 billion customer visits during its flagship festival sales event, “The Big Billion Days” (TBBD) in 2023. The company’s potential shift to India for its domicile mirrors a trend among startups, especially in sectors like fintech, e-commerce, stock broking, healthcare, and edtech, considering relocating or reverse-flipping to India.

For instance, fintech startup Groww has already made a formal move back to India from the US through a reverse flip. Similarly, PhonePe, another major fintech startup backed by Walmart, shifted its domicile from Singapore to India in October 2022, though it required several procedural steps and significant tax implications for its investors.

The Indian government’s attention to startups domiciled abroad, with a focus on bringing innovation back to India, is evident from the establishment of a committee for this purpose. This move aims to support startups gearing up for listings on Indian stock exchanges through IPOs, leveraging factors such as the burgeoning technology sector, investor confidence, a resilient economy, and favorable government policies.

In the e-commerce landscape, companies like Udaan, Meesho, and Zepto are also exploring similar shifts to list on Indian stock exchanges and streamline their group structures. Pepperfry, an online furniture brand, is reportedly among those considering such a move as well.

Beyond fintech and e-commerce, startups in other sectors, such as edtech, are also evaluating the feasibility of relocating their bases to India. For instance, Eruditus, a Singapore-headquartered edtech startup, is exploring the possibility, while fintech firms like Pine Labs, Razorpay, and Kreditbee are considering similar moves, partly due to regulatory alignment with the Reserve Bank of India (RBI).

As Flipkart contemplates its domicile shift, it represents not only a strategic move for the company but also a broader trend among startups recognizing the potential and benefits of being based in India, particularly in preparation for public listings and to capitalize on the booming Indian market.

Jhumpa Lahiri

Jhumpa Lahiri

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