Exclusive: Flipkart maps India redux; talks on to shift domicile from Singapore

Flipkart has begun active discussions to move its domicile back from Singapore to its country of origin, said people aware of the matter. The 17-year-old company is the country’s biggest consumer internet firm with a foreign domicile.

The homecoming for India’s best-known technology startup, which is now valued at around $33 billion, could also potentially deliver a handsome tax gain for the Indian government. Flipkart Pvt Ltd is the holding company based in Singapore.

Challenging Process

The Walmart-owned etailer has been discussing this shift internally with the senior leadership and plans are likely to gather momentum in the coming months, the people cited said. “This could also prove to be a challenging and multi-layered process, given Flipkart’s scale and the multiple entities involved that run its ecommerce business in India. But they want to move domicile here,” said one person.

Multiple units in India house Flipkart’s marketplace, logistics, payments and other ecommerce verticals.

Its plans to move domicile to India are linked to its eventual goal of an initial public offering (IPO). People in the know said that while Flipkart has no plans for an IPO in 2024, “recent consumer company IPOs have shown the appetite for large consumer businesses on domestic bourses, and the consideration to move its holding company to India is part of that. Flipkart has been sharpening its strategies to get to profitability.”

A Flipkart spokesperson did not respond to ET’s email query.

In late 2022, payments major PhonePe separated from the Flipkart Group and moved domicile back from Singapore. At that time, Walmart paid nearly $1 billion in local taxes. According to the US retailer’s annual report, it holds 84% in PhonePe and 85% in Flipkart as of January 31, 2024.

Flipkart’s valuation was readjusted to $33 billion after the separation.

Also read | Startups looking to reverse-flip must pay tax: Piyush Goyal

In financial year 2023, its India marketplace recorded a revenue of nearly Rs 15,000 crore. It is the largest horizontal etailer in the country and has been adding products and services —including travel — over the last two years.

ET in January reported on a Flipkart townhall, where group chief executive Kalyan Krishnamurthy told employees profitability was close. The company has focused on reducing operating burn across businesses, led by Krishnamurthy’s deeper engagement.

Flipkart is currently in the middle of a $1-billion round, with $600 million committed by Walmart, as disclosed in December.

City, Country, Hub

Flipkart, Blinkit (then known as Grofers) and Udaan are among top Indian internet startups with parent companies in Singapore.

Similar to Y Combinator-backed Indian startups having registered parent units in the US, these companies had set up holdcos overseas to raise faster capital from foreign investors. At the time, the Indian venture ecosystem did not possess adequate liquidity to fund large ecommerce ventures.

Now, however, with a far more mature ecosystem back home, a host of companies are planning comebacks.

According to founders and CEOs of several Indian internet firms based in Singapore, the city state’s approach has been liberal recently in granting reverse mergers for foreign companies to move domiciles back to their homes. “We have been engaging with regulators and courts closely in Singapore and the process is moving fast now,” said the founder of a unicorn startup looking to reverse flip. “A couple of applications with Singapore authorities have received in-principle clearance already.”

Several top venture investors and family offices of billionaires are also based in Singapore.

Passport to Benefits

There are a host of reasons behind the reverse flips, which ET has been reporting on. “Despite the funding winter over the last 18 months, India has been a bright spot compared to global markets. With activity picking in late-stage funding and IPOs, the appetite for new-age companies is evident here,” said a person clued into the ecosystem.

Last week, stock-broking startup Groww said it had completed its migration to India. Fintechs have especially focused on moving companies here to be in sync with regulatory structures and subsequently tap the IPO market.

The person cited above also mentioned the 12-18 months forward-looking valuation based on revenue and Ebitda being much better in India than any foreign domicile.

“Besides, the brand value of an ecommerce or payment company in the market it's operating in will always be higher than elsewhere,” he said, underscoring the perception of ‘Indianness’. “These companies had to set up this structure (based abroad) because of the situation back then.”