With IPO in mind, Flipkart may move domicile from Singapore to India

The move by the company, valued at $33 billion, may provide a huge tax gain for the Indian govt

Walmart-owned e-commerce firm Flipkart is reportedly planning to move its domicile back from Singapore to India, according to industry sources. The company, valued at $33 billion, may provide a significant tax gain for the Indian government, according to a report by The Economic Times (ET). Flipkart Pvt Ltd is a holding company based in Singapore.

The firm is intensifying its efforts to achieve profitability as it eyes a valuation of approximately $60 billion at the time of its initial public offering (IPO), now planned for 2025-2026 instead of this year, according to people familiar with the matter. The firm might consider listing in India and other geographies, including the US. Moving domicile to India is linked to eventual IPO plans.

The company, which counts Amazon and Reliance's JioMart among its competitors in India's burgeoning e-commerce market, had also contemplated launching an IPO in 2022-2023. However, it had to postpone the plan due to financial considerations and global macroeconomic uncertainty.

According to analysts, India's e-tailing sector is poised to experience fivefold growth, surging from $59 billion in 2022 to an estimated $300 billion by 2030, fuelled by value-seeking "mass" consumers. They attribute this to a burgeoning adoption of e-commerce in tier-2 and beyond cities.

Flipkart is already latching onto this trend. A record 1.4 billion customers visited Flipkart's platform during its flagship festival sales event, "The Big Billion Days" (TBBD) 2023.

Flipkart may join an increasing number of startups planning to move their domiciles to the country. Many Indian startups domiciled abroad are considering shifting their base or reverse-flipping to India. These include companies engaged in areas such as fintech, e-commerce, stock broking, health care, and edtech.

Fintech startup Groww has formally moved its domicile back to India from the US through a reverse flip by its parent firm, chief executive officer Lalit Keshre said on Thursday.

Walmart-backed PhonePe, another major fintech startup, moved its domicile from Singapore to India in October 2022. As part of this, it had to go through three steps. First, it moved all its businesses, including insurance and wealth broking, and all subsidiaries of PhonePe Singapore to PhonePe Pvt Ltd India. Secondly, PhonePe's board approved creating a new employee stock ownership plan (ESOP) and migrating more than 3,000 PhonePe group employees. PhonePe's investors, led by Walmart, had to pay about Rs 8,000 crore in taxes to allow the fintech firm to shift its domicile to India.

In March last year, the government noted that many Indian startups were domiciled abroad and set up a committee to suggest ways "to onshore the Indian innovation" to the International Financial Services Centre in the Gujarat International Finance Tec-City.

Experts said it helped to be in India if one was gearing up to list on the country's stock exchanges through an initial public offering (IPO). Other factors include the rise of technology firms in India, investor confidence, a resilient economy, and supportive government policies.

In e-commerce, companies such as Udaan, Meesho, and Zepto are also exploring similar moves. Online furniture brand Pepperfry is also one of them, according to sources. The aim is to list on Indian stock exchanges and streamline its group structure.

According to sources, Singapore-headquartered Eruditus is evaluating if it would be feasible for the edtech startup to move its base to India. They said fintech firms such as Pine Labs, Razorpay, and Kreditbee were also considering the shift. Besides local opportunities, fintech firms are making these efforts due to regulatory alignment with the Reserve Bank of India (RBI).