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Meesho, Pine Labs and Zepto eyeing shift to India
This transition comes with its own set of challenges, particularly in terms of tax implications and regulatory hurdles
Indian origin startups will have to address tax concerns owing to the shift / Canva
Several prominent startups, including Pine Labs, Zepto, and Meesho, are contemplating shifting their base to India from overseas in order to capitalize on the growing valuations offered by the domestic market.
However, this transition comes with its own set of challenges, particularly in terms of tax implications and regulatory hurdles.
Pine Labs, Meesho and Zepto’s case
Pine Labs has been actively seeking approval for a cross-border merger of its Singapore-based holding company with its Indian operations, as per the Economic Times. Pine Labs is a merchant platform that provides businesses with multiple payment options.
Similarly, Zepto, a quick commerce firm, is also reportedly in the advanced stages of filing a similar application. Meesho, another prominent player in the e-commerce business sector, has been exploring avenues for fresh funding to address the additional tax liabilities associated with relocating to India.
The tax concerns that follow
While the prospect of higher valuations in the Indian market is exciting and promising, the tax implications prove to be a primary concern for these start-ups.
The decision to pay taxes in foreign markets or India rests on various factors, including company valuation and third-party audits. Meesho, for instance, was reportedly advised against using its existing cash reserves for the relocation process. They were suggested to opt for a new fundraising round instead.
The startups relied on foreign investors in the initial stages, using their funding to establish companies overseas. This was because securing adequate funding locally was a challenge. However, in hindsight, this approach emerged as a significant issue for the companies.
Despite the hurdles, the rising valuations and the consumption-led economy have proved to be a compelling incentive for startups.
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