After their first growth phase, Indian startups have been increasingly venturing abroad to the US, Singapore, and even the United Arab Emirates (UAE), according to industry insiders
A large number of Indian startups are moving out of India, according to investors. While there are a variety of reasons for the relocation, one of the main reasons is that foreign investors want their IPR (intellectual property) to be housed abroad.
After their first growth phase, Indian startups have been increasingly venturing abroad to the US, Singapore, and even the United Arab Emirates (UAE), according to industry insiders. “The US and other countries are home to many investors and private equity (PE) funds. They also put pressure on Indian startup entrepreneurs to leave India and store their intellectual property abroad,” an entrepreneur told StartupStory, asking to remain anonymous.
Indian Finance Minister Nirmala Sitharaman stated that the government could speak to Indian entrepreneurs and address their problems so that they remain in the country.
Deep tech businesses and B2B software as a service (SaaS) providers frequently relocate to the US and some to Singapore. They initially set up shop in India because of the country’s entrepreneurial talent, vibrant investment environment, high-caliber tech workforce, and most crucially, its capacity to create and manage pilot programmes at reasonable rates.
Officials from the businesses indicated that other problems that need to be resolved include the challenging online application process and the Indian bureaucratic delays
One of India’s oldest venture capital organisations, Ventureast’s Managing Partner Sarath Naru said that being close to their market was the main motivation behind their relocation. “The Indian market is often limited for these companies, making it unprofitable for them to keep investing in technology and competing with multinational corporations. Being close to the markets makes the most economic and strategic sense given that the US and Southeast Asia both provide sizable, ready markets,” said Naru. The IP may still be owned by Indians, which is typically the case to the level of ownership. Additionally, there are rare instances where certain talent is more readily available abroad, according to Naru.
“Investors choose some nations’ tax policies because they have lower income and capital gains taxes, aside from the IPR housing factor. Additionally, this encourages firms to relocate, wherein the founders eventually become Non-Resident Indians (NRI),” informed Kris Gopalakrishnan, Chairman of Axilor Ventures. “Some of these governments offer particular incentives, such as grants based on local employment and rent reimbursements. Additionally, there is access to capital that does not finance Indian businesses. Finally, SAS businesses, particularly enterprise SAS, relocate to the US or UK to be nearer to their business clients,” said Gopalakrishnan.
Officials from the businesses indicated that other problems that need to be resolved include the challenging online application process and the Indian bureaucratic delays.
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