Groww pays $160M tax as it returns to India amid a startup relocation wave

In a significant development, Indian stock trading and mutual fund startup Groww paid $159.4 million in taxes as it shifted its domicile back to India from the U.S. This move highlights a growing trend of Indian startups relocating their headquarters to India from other countries, particularly the U.S. and Singapore.

Groww's Tax Payment

Groww's decision to return to India comes at a time when several other Indian startups are also in the process of relocating their headquarters. This shift is driven by a desire to better comply with Indian laws and facilitate Initial Public Offerings (IPOs) in the country.

Startup Relocation Wave

The relocation wave is a testament to the evolving startup landscape in India. The country has emerged as a vibrant ecosystem for startups, attracting significant investments and showcasing strong growth potential.

Reasons for Relocation

Several factors contribute to this relocation trend:

• Compliance with Indian Laws: Returning to India enables startups to comply with local regulations and governance frameworks.
• Facilitating IPOs: Relocating to India makes it easier for startups to tap into the domestic IPO market, which has seen significant activity in recent years.

Indian IPO Market

The Indian IPO market has witnessed a surge in activity in 2024, with nearly 70 IPOs already taking place in the first nine months. This makes 2024 the second-highest year on record for IPOs in India.

The U.S. IPO market, on the other hand, has been relatively subdued, making India an attractive alternative for startups seeking public listing.

Analyst Coverage

One crucial factor driving the relocation is the availability of better analyst coverage in India. This coverage is essential for attracting institutional investors, particularly for companies valued below $2 billion.

Many Indian startups, including those backed by Y Combinator, had chosen to base their headquarters in the U.S. in the past decade. However, the potential for increased visibility and access to funding in India is prompting them to reconsider their location.

Y Combinator Startups

Y Combinator, a renowned startup accelerator, has played a significant role in supporting the growth of Indian startups. Many of these startups, recognizing the favorable conditions in India, are now choosing to return to their home country.

Summary

• Indian startups are relocating to India due to favorable market conditions, compliance requirements, and access to better analyst coverage.
• The Indian IPO market is thriving, attracting more companies seeking public listing.
• The relocation trend is driven by a desire to better comply with Indian laws and facilitate IPOs in the country.
• Y Combinator startups are also returning to India, recognizing the growing startup ecosystem and potential for success.