Economics
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)
- They can sell their own goods in addition to offering their platforms as market-places.
- The degree to which they can own big sellers on their platforms is limited.
Select the correct answer using the code given below:
- 1 only
- 2 only
- Both 1 and 2
- Neither 1 nor 2
Q.2) Consider the following statements
Other things remaining unchanged, market demand for a good might increase if
- Price of its substitute increases
- Price of its complement increases
- The good is an inferior good and income of the consumers increases
- Its price falls
Which of the above statements are correct? (2021)
- 1 and 4 only
- 2, 3 and 4
- 1, 3 and 4
- 1, 2 and 3
