Reverse-flipping

  • IASbaba
  • February 4, 2023
  • 0
Economics
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Context: Economic Survey 2022-23 has suggested measures like simplifying ESOP taxation, and easier corporate laws like in the US and Singapore to accelerate reverse-flipping among startups, namely moving domicile back to India.

About Flipping and Reverse-flipping:

  • Flipping is the process of transferring entire ownership of an Indian company to an overseas entity.
    • It is generally accompanied by a transfer of all intellectual property and data owned by an Indian company.
  • Reverse Flipping is the process of shifting the domicile of those companies back to India who flipped earlier.
    • Companies reverse flip because of easy access to capital from private equity and venture capital, changes in rules regarding round-tripping, and the growing maturity of India’s capital market.

Reasons for Flipping:

  • Flipping happens at the early stage of the startups, driven by commercial, taxation and personal preferences of founders and investors.
    • Some companies decide to ‘flip’ because the major market of their product is offshore.
    • Sometimes, investor preferences like access to incubators drive the companies to ‘flip’ as they insist on a particular domicile.
  • For easy access to capital from private equity and venture capital, changes in rules regarding round-tripping, and the growing maturity of India’s capital market.

Source: The Hindu

Previous Year Questions

Q.1) With reference to foreign-owned e-commerce firms operating in India, which of the following statements is/are correct? (2022)

  1. They can sell their own goods in addition to offering their platforms as market-places.
  2. The degree to which they can own big sellers on their platforms is limited.

Select the correct answer using the code given below:

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

Q.2) Consider the following statements

Other things remaining unchanged, market demand for a good might increase if

  1. Price of its substitute increases
  2. Price of its complement increases
  3. The good is an inferior good and income of the consumers increases
  4. Its price falls

Which of the above statements are correct? (2021)

  1. 1 and 4 only
  2. 2, 3 and 4
  3. 1, 3 and 4
  4. 1, 2 and 3

 

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