It is not uncommon that many domestic startups, as well as many corporations, are leaning towards structuring their operations by establishing a holding company overseas, with its wholly-owned subsidiary company incorporated in India. This is known as reverse flipping. The rationale for extending an arm outside the country’s borders by the Indian founders is undertaken for a host of reasons, which mostly include corporate and tax concessions that are offered by the host country.
While India has, with its ease of doing business initiative, acted as a host country for many foreign investors/businesses looking for investment/ a place of business, by either incorporating a foreign company in India or investing in an Indian company as angel/strategic investors. Nevertheless, with the ease being limited, many consider the mechanism of flipping the structure, in other words called, externalisation of the holding structure.
The Foreign Exchange Management (Overseas Investment) Rules, 20...