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Upturn: Naukri.com founder Sanjeev Bikchandani says foreign funds colonizing Indian startups.

In perhaps the first red flag by a significant startup curator against ‘flipping’, a Naukri.com and Zomato investor has said foreign funds are the new East India Company that are colonizing successful startups in India by transferring ownership overseas to skip Indian regulations and taxes.

Internet entrepreneur Sanjeev Bikhchandani says an estimated Rs 17 lakh crore of market cap has been transferred abroad after young Indian startups were forced to shift their company domicile overseas.

While on Twitter he said – 

“Shades of the East India Company type of situation here – Indian market, Indian customers, Indian developers, Indian workforce. However 100% foreign ownership, foreign investors. IP and data transferred overseas. Transfer pricing issues foggy,” 

“Basically institutionalized transfer of wealth away from India while living off the Indian market and Indian labor somewhat like the days of the Company rule.”

Profits from such “global exploitation” of intellectual property (IP) created in India by Indians retained overseas. “Tax to Indian govt on such profits??? Indian investors shut out,”

Reached for comments on his tweets, Bikhchandani, whose BSE-listed firm Info Edge (India) owns job search portal naukri.com, matrimony site jeevasathi.com, and real estate search engine 99acres.com, said flipping is externalizing a company.

“You take an Indian startup and transfer ownership of all its shares to an overseas company that has been usually freshly floated just for this purpose. So now the Indian company becomes a 100% subsidiary of the overseas entity,” he told PTI.

Asked how many Indian startups would have changed domicile in the last few years, he said there is no comprehensive enumeration, but he would estimate that between 500 to 1,000 startups have flipped overseas in the last five to seven years.

Considering 500 of India’s best startups shifted overseas and 2% of those become as successful as Naukri and half of 1% become as successful as Infosys, there is a loss of over Rs 17 lakh crore of market cap to the nation at current prices.

“These companies will operate in India and access the market, however, they will not be Indian companies,” he said. “A domicile shift and transfer of IP and data to an overseas company is a permanent loss – and as a company grows so does this loss.”


Stating that the government is the best custodian of national interest, Bikhchandani said the policy has to comprise a package of both incentives and disincentives to encourage certain types of behavior and discourage other types.

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