Indian companies that had previously chosen to establish themselves overseas in order to cater to the Indian market are now making a significant move back to their home country. The trend, termed 'ghar-wapsi' by Nithin Kamath, indicates a reversal of the issue he raised three years ago concerning Indian companies incorporating outside of the country despite building products for the Indian market.
This shift is occurring amidst a period where the number of Indian companies valued at over $1 billion is at a record high, and the stock market in India is experiencing a substantial increase in retail investors, growing from 3 crore in 2020 to 10 crore unique investors. The favorable market conditions, coupled with the ease of going public, are contributing to what Kamath describes as a 'ghar-wapsi' of Indian companies incorporated abroad.
The Ministry of Corporate Affairs (MCA) has recently made amendments to its Companies (Compromises, Arrangements, and Amalgamations) Amendment Rules, outlining the compliance requirements for companies looking to return to India. This process includes securing approval from the Reserve Bank of India (RBI), adhering to the provisions of Section 233 of the Companies Act, and submitting an application to the Central government for the relocation process to be completed. The phenomenon of 'reverse flipping,' where companies relocate back to their home country for regulatory or tax advantages, has gained traction globally.