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Razorpay, a fintech startup established in Bengaluru, has formally moved its global headquarters back to India after completing a historic corporate restructure. Shashank Kumar, the managing director and co-founder of the company, declared on Thursday that the “reverse flip” was finished, which is a significant turning point in Razorpay’s development. Reversing a trend whereby Indian entrepreneurs sought to domicile abroad in order to have access to global financing and regulatory flexibility, this move establishes India as the company’s worldwide headquarters.
Razorpay’s decision to redomicile comes amid growing encouragement from Indian regulators and policymakers for high-growth startups to anchor themselves domestically. The company, founded in 2014 by Shashank Kumar and Harshil Mathur, offers a suite of digital payment and banking solutions to over 10 million Indian businesses. By shifting its parent company’s domicile to India, Razorpay joins a select group of major Indian startups, including PhonePe, Groww, and Zepto, that have undertaken similar reverse flips in recent years.
The Mechanics and Costs of the Reverse Flip:
The process of reverse flipping involved merging Razorpay’s US-registered parent entity with its Indian subsidiary, Razorpay Software India Pvt Ltd. This complex restructuring consolidates the company’s operations under Indian jurisdiction and was initiated in May 2023, ahead of Razorpay’s plans to list on Indian stock exchanges. The company fast-tracked the process, benefiting from recent regulatory reforms that have reduced the time required for such mergers from 12–18 months to approximately three to four months.
An enormous financial expense is associated with the reverse flip. Over ₹1,245 crore, or roughly $150 million, in taxes would be paid by Razorpay as part of the procedure. The tax liability is due to capital gains taxes that were imposed on the shares that were revalued during the migration. According to reports, the corporation would fulfill its commitment without obtaining new funding by using its own cash reserves. In spite of the high cost, Razorpay sees this as a strategic investment in India’s developing digital economy and a testament to its long-term dedication to the nation.
Strategic Implications and Future Plans:
Razorpay’s reverse flip is more than a structural change—it represents a strong vote of confidence in India’s economic future, regulatory environment, and the potential for homegrown innovation. With the move now complete, Razorpay is better positioned to simplify compliance, facilitate faster decision-making, and strengthen its eligibility for a local IPO. The company has already converted itself into a public limited company and is focused on building a strong financial track record ahead of its planned public listing, which is expected in the next 18–24 months.
The decision to reverse flip also aligns Razorpay with its primary market and customer base. India has always been Razorpay’s largest market, and the company’s leadership believes that being headquartered in India will enable closer alignment with local regulations, customer needs, and growth opportunities. Razorpay currently holds a Payment Aggregator license from the Reserve Bank of India and continues to expand its product offerings, including payments, payroll, and banking solutions.
Broader Impact on India’s Startup Ecosystem:
Razorpay’s successful reverse flip is expected to set a precedent for other Indian startups that had previously incorporated overseas. The trend of “homecoming” is gaining momentum, driven by factors such as improved regulatory clarity, better access to capital, and enhanced valuations in India’s domestic markets. The Indian government has also signaled its intent to streamline taxation and compliance hurdles for startups considering similar moves.
Other notable companies that have completed or are exploring reverse flips include PhonePe, which paid about $1 billion in capital gains taxes to shift from Singapore to India, and Groww, which moved its domicile from the US to India last year. Quick commerce platform Zepto has also shifted its domicile from Singapore to India, while e-commerce giant Flipkart has signaled its intent to follow suit as it prepares for an IPO.
Razorpay’s financial performance remains robust, with FY24 revenue rising 24% to ₹2,068 crore and net profit growing 4.7 times to ₹35 crore. The company is backed by prominent investors, including Y Combinator, GIC, Sequoia Capital India, Ribbit Capital, Matrix Partners, and MasterCard, with total funding exceeding $740 million and a valuation of over $7 billion.
Conclusion
Razorpay’s completion of its reverse flip from the US to India is a landmark event for the Indian startup ecosystem. The move not only highlights Razorpay’s confidence in India’s economic future but also highlights the growing maturity of the country’s regulatory and capital markets. With its headquarters now firmly rooted in India, Razorpay is well-positioned to capitalize on the next phase of its growth and set an example for other startups considering a similar homecoming.
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