Indian startups that once shifted their parent companies abroad for better funding access and regulatory ease are now making their way back home. This trend, known as a reverse flip, involves shifting the holding structure from a foreign country — such as Singapore or the U.S. — back to India. The reasons vary: better valuations, simplified listing routes, growing retail participation, and policy reforms all make India a more attractive destination again. This blog breaks down the reverse flip concept, popular methods, recent high-profile examples, and the legal and tax implications for both Singapore and India.
What is Flip Structure?
In the early growth stages, many Indian startups chose to “flip” — meaning they moved their main holding entity from India to a foreign country like Singapore, the U.S., or the UK. Why? These jurisdictions offered easier access to venture capital, tax benefits, and fewer regulatory hurdles compared to India.
However, this came at a cost. For India, it meant:
- A dip in tax revenues
- Fewer job opportunities
- Lower foreign exchange reserves
This led to increased scrutiny, and eventually, a new wave — the reverse flip.
What is Reverse Flip?
A reverse flip is when companies shift their domicile from a foreign country back to India. It’s becoming increasingly common in the Indian startup ecosystem, especially as local capital markets become more active and accessible.
Why Reverse Flip?
- Better valuations in the Indian market
- Easier access to capital and stock exchanges
- Higher interest from Indian retail investors
- Supportive PE/VC ecosystem within India
Two Popular Methods to Reverse Flip
Startups typically choose one of two ways to execute a reverse flip:
1. Share Swap Method
- Transfers ownership of the entity
- Easier and quicker to implement
- Involves lower compliance burden
- Results in high tax outflow
- The foreign company continues to exist
2. Cross-Border Merger
- The foreign entity merges with an Indian company
- Requires approvals in both countries
- Generally tax efficient
- The foreign company ceases to exist
- Involves higher compliance, but now simplified in India
📝 Update: As of 9th September 2024, if the merger is between a holding company and its 100% subsidiary, no NCLT approval is needed in India — subject to RBI clearance.
Recent Reverse Flips by India-Focused Entities
Here are some real-world examples of reverse flips that have been completed or are underway:
| Company | From → To | Mode | Estimated Tax Impact |
| PhonePe | Singapore → India | Share Swap | USD 1 billion (India) |
| Razorpay | USA → India | Cross-border merger | USD 300 million (USA) |
| Groww | USA → India | Cross-border merger | USD 60–70 million (USA) |
| Pine Labs | Singapore → India | Cross-border merger | Presumed tax neutral |
These cases show a clear movement back to India, each using the method best suited to their structure and long-term goals.
Implications in Singapore and India
A. Corporate Law: Singapore
The Singapore Companies Act distinguishes between types of mergers:
- Section 215A–G: Limited to companies incorporated under Singapore law. Doesn’t cover foreign-bound mergers.
- Section 212: Broader scope — applies to corporations that can be wound up under Singapore law, including foreign companies.
This allowed Pine Labs to gain Singapore court approval for merging into an Indian company under Section 212 — setting a useful precedent for others.
B. Income Tax Law: Singapore
- Section 34C of SITA outlines tax treatment in amalgamations.
- There’s no capital gains tax on the transfer of assets or shares.
- Shareholders also aren’t taxed when disposing of shares in a Singapore company.
In short, no tax burden arises in most reverse flips under Singapore law — provided conditions are met.
C. Stamp Duty Law: Singapore
- Stamp duty applies to immovable property and shares in Singapore.
- Foreign share transfers (like those of a company incorporated in India) are not dutiable.
- Relief is available in cases involving mergers or transfers between group companies — again, subject to conditions.
Implications in India
1. Corporate Law
- Cross-border mergers previously needed NCLT approval
- Since September 2024, this requirement is waived for mergers between a holding and its 100% subsidiary — but RBI approval is still required
2. Income Tax
- If the Indian company is the amalgamated entity, and specific conditions are met:
- The transaction is tax neutral
- No capital gains tax for the foreign entity or its shareholders
3. Stamp Duty
- Varies depending on where the Indian transferee company is registered
- Must be evaluated on a case-by-case basis
4. FEMA Compliance
- Merger must align with:
- Indian Companies Act
- FEMA cross-border merger rules
- International pricing guidelines
- RBI notifications and filings
Way Forward
As valuations rise and the domestic ecosystem matures, more startups are eyeing India as their long-term base. With recent regulatory relaxations, especially around court approvals, reverse flips via mergers have become more accessible.
That said, reverse flipping isn’t a one-size-fits-all move. Every business must evaluate:
- Tax exposures
- Legal approvals
- Operational restructuring
- Regulatory filings in both jurisdictions
Done right, it can offer long-term advantages — but it needs thoughtful execution.
