The fintech industry is undergoing a monumental shift as Indian startups reconsider their global strategies and return to India. Groww, the stock trading and mutual fund platform, recently made headlines by paying a hefty $159.4 million in taxes as it shifted its domicile from the U.S. to India. This move is not isolated; nearly a dozen Indian startups are following suit, marking a growing trend of relocation aimed at capitalizing on India’s surging IPO market and regulatory environment.

India's stock market has emerged as a promising ground for public offerings. With almost 70 IPOs recorded in the first nine months of 2024, this year is shaping up to be the second-highest on record for Indian IPOs. While U.S. markets have shown sluggish growth, India offers an exciting landscape, especially for companies that may not reach valuations of over $2 billion. The promise of better analyst coverage and improved engagement with institutional investors makes India a more appealing option for these firms.

One driving force behind Groww’s decision is the growing complexity of fintech infrastructure. "There is a lot of investment that is needed, infrastructure is very complicated...We have 400 engineers working just to get things perfect because it is the customer's money and that is the promise," said Lalit Keshre, co-founder of Groww. His comments highlight the immense technical challenges fintech companies face in building secure, reliable platforms for users.

The repatriation of Indian startups also ties into the evolving global regulatory landscape. Companies are seeking environments where they can thrive under more favorable regulations and growth opportunities. India’s regulatory structure for IPOs and compliance offers these startups a better chance to scale sustainably, allowing them to remain competitive in both local and global markets.

"India’s booming IPO market is a testament to the country's growing economic stature and the promise it holds for future unicorns."

This trend underscores a shift in the global startup ecosystem. The move back to India signifies more than just a tax event—it reflects a deeper alignment between Indian startups and the country’s financial future. While this shift brings tax obligations for companies and their investors, it sets the stage for future growth.

In the coming years, this wave of relocations is poised to strengthen India’s position as a leading hub for innovation and public offerings.

Source: Tech Crunch