Why Are Brands Returning Back to Their Home Turf - India?

In a recent turn of events, Indian companies that once set up shop abroad are now making their way back home. This "ghar-wapsi" (homecoming) of brands is not just a cultural sentiment; it's a strategic business move shaped by a combination of favorable market conditions, regulatory changes, and a surge in domestic investor participation. Nithin Kamath, the co-founder of Zerodha, aptly highlighted this trend, emphasising a reversal of a phenomenon that began several years ago.

The Great “Reverse Flip” – What’s Driving This Shift?

1. Regulatory Changes and the "Reverse Flipping" Phenomenon: Traditionally, many Indian startups chose to incorporate abroad, often in places like Singapore or the US, to take advantage of more business-friendly regulations, tax benefits, and easier access to capital. However, recent policy changes in India are turning the tide. The Ministry of Corporate Affairs has eased the process for foreign-incorporated startups to merge back with their Indian entities, a move designed to promote "reverse flipping" – essentially, encouraging companies to bring their headquarters back to India. By scrapping the need for lengthy clearances from the National Company Law Tribunal (NCLT) and requiring only the approval of the Reserve Bank of India (RBI), the government has made it significantly easier for companies to "come home".
2. A Bull Market and Surge in Retail Participation: The Indian stock market is currently witnessing a historic surge in retail participation. The number of unique investors has jumped from 3 crore in 2020 to 10 crore in 2024, thanks to a booming bull market and easier routes to going public. This growing investor base provides a fertile ground for companies looking to raise funds locally rather than relying on foreign investors. Companies are finding it more viable to operate from India, where they can tap into this increasingly lucrative domestic market.
3. Market Cap Milestones and Growth Potential: Indian companies are reaching unprecedented valuations, with the number of firms having a market cap of over $1 billion at an all-time high. This growth in market capitalisation signals a strong confidence in the domestic market's potential, which in turn attracts even more companies to relocate their headquarters back to India. Moreover, the success stories of companies like Zerodha, which have thrived by focusing on the Indian market, serve as a powerful motivator for others to follow suit.

A Global Trend: Not Just an Indian Story

This "ghar-wapsi" isn't unique to India; it's part of a broader global trend where companies are increasingly moving their headquarters back to their home countries to benefit from local regulations, reduced compliance costs, and a supportive ecosystem. A report by Mario Draghi, former President of the European Central Bank, revealed that nearly 30% of unicorns founded in Europe between 2008 and 2021 shifted their headquarters abroad, predominantly to the US. Similarly, Indian firms are now capitalising on a welcoming home environment, just as European firms have done in their markets.

What's Next for Indian Companies?

Nithin Kamath believes that this trend marks a pivotal shift in the Indian business landscape. The focus is now on building global products and services right here in India. As he puts it, "What we need now are more Indian businesses, located in India, building products and services for the global market". The "ghar-wapsi" of Indian companies signifies not just a change in geographical location but also a renewed commitment to innovation and growth from within the country.

A Homecoming Worth Celebrating

The return of Indian brands to their home turf marks a new chapter for India's business ecosystem. With a supportive regulatory environment, a booming stock market, and an enthusiastic investor base, this "reverse flipping" trend is likely to continue. As Indian companies come home to build for the world, it's clear that the tables have indeed turned – and for the better.