Flipping of Indian Unicorns


By Ashwani Mahajan
India has been proud of its startups creating immense value and adding to the GDP of the country. Our startups could be a reason for envy of our competitors too. But our happiness remains short-lived when we find that they have not remained Indian any more. Most of these high ticket startups have flipped away and are no longer Indian companies in essence.

We may take pride in saying that two Indian boys made a unicorn (Flipkart), which ultimately attained market valuation of 20 billion US dollars, but fact of the matter is that the promoters of Flipkart flipped away from India and registered their company and other associated companies in Singapore. And the set of companies were sold to Walmart (with 77 percent of the shares were transferred to Walmart) and not just a unicorn which was already flipped away went into the hands of a foreign company, Indian retail market share was also transferred to a foreign company silently.

Flipping of Indian Startups

Flipping of an Indian company means a transaction where an Indian company incorporates a company in a foreign jurisdiction, which is then made the holding company of the subsidiary in India. The most favourable foreign jurisdiction for Indian companies are Singapore, United States and United Kingdom. One of the methods for implementing as ‘flip’ transaction is through a share swap. Under this exercise, after the Indian promoters have incorporated an international holding company the shares held by the shareholders of the domestic company are swapped with the shares of the overseas holding company. As a consequence, the shareholders of the domestic company become shareholders of the overseas holding company. In place of a share swap, a flip structure can also be executed when the shareholders of the Indian company acquire shares of the overseas holding company and the holding company acquires all the shares of the Indian company from its shareholders.

It is interesting to note that several hundreds of Indian unicorns have either flipped or were incorporated abroad, which have Indian founders who started off in India. Amongst them majority have operations and primary market in India. Nearly all have developed their intellectual property (IP) using Indian resources (human, capital assets, government support, etc.).

Why Unicorns Flip?

1. Avoiding Indian regulatory landscape, Indian tax laws and scrutiny by Indian authorities.

2. Various International investors force their investee companies to flip abroad and sometimes even keep this as a condition precedent to their investment in these startups as they want the data and IP to be headquartered overseas where they will put their money.

3. Most of the business is from overseas clients and these clients want to contract with overseas parent company only (this is not a valid reason though because contracting with an overseas subsidiary could serve the same purpose without flipping the company. Moreover, Indian IT services firms like Infosys, HCL etc. have managed to do sizeable business in various overseas territories while being headquartered in India).

4. Favorable foreign policies that nations like US and Singapore have adopted also attracts startups and investors. Some of these policies are lower corporate tax, Fixed GST, Zero capital gains tax rate, double taxation avoidance treaties, simple majority vote on critical issues, evolved IP protection laws etc.

5. Desire to publicly list overseas with the assumption that valuations are higher due to deeper pools of investors.

Implications of Flipping

Flipping results in materially adverse impact on national economic interest:
1. Loss of revenue : Flipping leads to immense economic and national loss as an Indian Company becomes a wholly-owned subsidiary of the foreign corporation despite 90%+ value creation from India, resulting in loss of all future tax on capital gains, public listing, operational profits etc.

2. Ownership of critical data as well as IP is transferred abroad : Various such companies hold critical consumer data and IP whose ownership essentially transfers abroad. Most of these companies are growing 100-200% annually and are increasingly capturing more and more critical consumer data. Flipping imposes a security threat on all critical data and also results in substantial loss of possible future value creation from all associated IPs of that company.

3. Circumvention of Indian Laws : Flipped startups circumvent Indian tax law and other legal regulations and gain unfair advantage over their domestic counterparts. It effectively becomes a structure to transfer value creation from India to overseas territories since most of the business is still being done in India with teams based here too.

4. Security threats : Due to foreign HQ structures, the Indian government can’t determine source of money backing these companies which can result in security issues for the nation in case war like activities arise in future. For example, money from neighboring countries is only allowed in India-domiciled startups after the requisite approvals but overseas headquartered startups do not need any such approvals.

5. Giving unfair advantage to Foreign Investors : Foreign investors are keen to take advantage of India’s growing economy and flipping makes it possible for them to circumvent coming to the country (which they should have done). This sets in motion a vicious cycle then as more and more overseas investors start seeing flipping as a legitimate ask without concern of loss to India.

6. Against deepening of Indian Equity Markets : As these flipped startups will also list overseas, Indian public equity markets will loose depth.

It becomes a way for foreign investors to gain from India’s wealth of resources and advancement by bypassing our laws and regulations.

Flipping is the perfect example that India rolls red carpet to foreigners and show red tape to indigenous players.

The foreign entities get exemptions during land allocations in various states, but indigenous players are left to fend for themselves.

Flipped entity gets access to easy & cheaper access to capital and it’s much easier to take money out as well (using DTAA).

Even Indian funds pay higher capital gains tax than their foreign counterparts investing in India.

There is need to overhaul the system, from policy, regulations, access to capital to push entities to register in India. The differential policies discriminating indigenous and attracting foreign entities need to stop.

However, to ultimately discourage Indian start-ups to flip, we need to take some tough measures as well, including declaring those who flip, a foreign company.

(The writer is a professor and the national co-convenor of Swadeshi Jagran Manch. Twitter: @ashwani_mahajan. The views expressed are personal.)

Source: IANS

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7 Reasons Why You Should Purchase Italian Furniture

7 Reasons Why You Should Purchase Italian Furniture

Very often we see people speaking ever so highly of the Italian furniture they own, while we see others gushing over Italian furniture and expressing their deep desire to own at least one such piece of furniture. Italian design and decor are widely hailed across the world for their strong emphasis on quality and simple shapes that combine both tradition and modernity through the finest craftsmanship.

The way a person decorates their home is a reflection of their personal style and identity. Needless to say, tastes and preferences vary wildly, especially when it comes to items of furniture with regard to their size, shape, texture, and color.  However, regardless of the specific kind of design a person likes, Italian furniture is a dominant player in the furniture and home design industry.

For several centuries, Italy has been considered to be a hub for culture, literature, and the arts as well as architecture and design. Italian style interior design has been the preferred choice for an ever-increasing number of people, and this is not just a recent trend. Italy is a country that is synonymous with class, sophistication, and exceptionally high quality, and this shows in the sheer popularity of Italian furniture today. Italian sofa manufacturers take great pride in the quality and design of their sofa sets, and one need not look far to see that even the most discerning customers are duly pleased with Italian furniture.

So what is it that makes Italian furniture so popular? Let’s take a closer look!

Timeless charm and appeal

Italian sofas, chairs, tables, and other pieces of furniture have a charm that is impossible to compete with, leave alone outdo. Not only are Italian furniture pieces renowned across the world for their quality and appeal, but they are also items whose aesthetic value appreciates over time. Italian furniture has an inimitably characteristic beauty and these furniture pieces only tend to look even better as the years’ pass. The fact that only the best quality materials are used for their manufacture is what makes Italian furniture so sought after.

Strong and durable

While many prospective customers will tend to get deterred or even discouraged by the fact that Italian furniture costs a fair amount of money, these furniture pieces are made with the best quality materials and are guaranteed to last for decades if not centuries. That being said, purchasing Italian furniture should be best viewed as an investment and not just an expenditure, as the elegance, durability, and comfort that these furniture pieces will offer you are their own reward.

Unbeatable quality and elegance

Italian artisans and craftsmen are famous across the world for their dedication, patience, and attention to detail. It goes without saying that Italian products, in general, are synonymous with high quality, and one only needs to look at history to see how true this is. Since time immemorial, Italian manufactures have strived for excellence and have always made sure that the products they make are nothing short of the best. Therefore, Italian furniture is a symbol of Italian perfection, sophistication, and class.

Exquisitely comfortable

The very purpose of furniture pieces such as sofas, chairs, and couches is to provide comfort to people. Italian furniture will not just provide unmatched comfort but will also give any person the feeling of being in exquisite and opulent surroundings. There is no doubt that a handcrafted piece of Italian furniture will convey a feeling of elegance and sophistication.

Wide variety of furniture designs

Many people are under the wrong impression that Italian furniture is available only in very specific parts of the world and that they are few in number. The good news is that this is not true. Artyz offers you a wide assortment of Italian furniture, and you are sure to find something that perfectly suits the design and aesthetics of your home. Not only will you be able to choose from sofas, ottomans, tables, beds, tables, and much more, you will also have the choice of selecting from a wide variety of designs. Given the fact that a lot of hard work and craftsmanship goes into making Italian furniture, you can make your living space truly unique by purchasing one or more exquisite furniture pieces.

High caliber craftsmanship

Italy is a world leader in manufacturing for a number of reasons. To begin with, only the highest quality of materials are used, and this, coupled with the unique and unparalleled skill sets that Italian artisans have, you can be assured of nothing less than the best. Italy has long been hailed for its contributions to several fields of the arts, such as painting, sculpture, music as well as design. That being said, painstaking hard work, unbridled dedication, and sharp attention to detail have made Italian craftsmanship an ideal in and of itself.

Novelty and inimitability

Unlike cheaper, mass-produced furniture that is readily available and most often delivered in a cardboard box, Italian furniture pieces are meticulously handcrafted and made with immense dedication and focus on the details. Italian furniture is very eye-catching and will without a doubt convey a sense of luxury and opulence to both residents and guests alike. Such furniture pieces will have a direct effect on the mindset and mood of residents as they will notice how the furniture pieces enhance and enrich the home.

Before you rush off to purchase Italian furniture pieces for your home, do check out Artyz. Artyz is a renowned furniture showroom in Kolkata that offers you a vast range of furniture choices that can suit the requirements of any living space and can accommodate any budget. As a leading furniture showroom, the focus remains entirely on providing top-quality furniture at affordable and reasonable prices. Simply take your pick from the diverse furniture selection and let Artyz handle the rest. By having Italian furniture in your home, you will be able to liven up your living space in unimaginable ways. The sheer elegance of Italian furniture is what creates a statement like no other style.

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Inspiring Journey of Rajasthan’s Deependra Singh Shekhawat From Monthly Salaries to Founder of Fifteen Crore Turnovers Company

Inspiring Journey of Rajasthan’s Deependra Singh Shekhawat From Monthly Salaries to Founder of Fifteen Crore Turnovers Company

Guy Kawasaki has rightly said that pursuing your passions makes you more interesting, and interesting people are enchanting. Passion is an underrated term as people believe more in hard work and dedication. We often forget that passion is what guides us to success. Deependra Singh Shekhawat is one of the few who proved that hurdles are hidden opportunities, and when utilized appropriately, they will lead you to victory.

Deependra Singh Shekhawat, being the son of a farmer, has the background of a middle-class family. He belongs to a small village of Udaipurwati, district Jhunjhunu of Rajasthan. However, his status never deterred him from dreaming. Dreams full of his passion gave him the strength to fight the battles in his life. After graduation, he initially started from a regular job. However, he was not content with his occupation. He sensed stagnancy in his career. Soon, he started thinking and strategizing about business. This thought process led him to join a renewable energy company, Adani Renewable Energy, to learn about business as the next step in his professional journey. From then on, there was no stopping him; he was on a roll. In 2015, he established Vertex Solution Company and became one of the top vendors of Adani Solar Energy. He went the extra mile by working with India’s well-known renewable energy organizations as Avada Sola, Tata Solar, O2 Power, and many more.

Deependra says that his passion for renewable energy spawns from the fact that renewable energy is one of the significant contributors to boosting the country’s economy and generating jobs. He further adds that adopting renewable sources of energy is a healthier option. He claims it is high time we start living peacefully with nature for the sanity of itself and humankind. Additionally, he has provided with job opportunities for the youth of his village Sarai and has become the Youth icon of Rajasthan. Despite belonging to a middle-class family, he left no stones unturned to achieve success and rose from the bottom of the pit to flying like an eagle. From having big dreams to making others’ dreams come true, he has come a long way.

His journey is inspiring hundreds and thousands of youngsters of middle-class families throughout the country. People are burning with passion after witnessing the change in his life. His life journey is constantly changing the lives of many for the best. He is igniting the fire of eagerness for victory in them.


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