Flipkart, the major e-commerce company owned by Walmart, has received official approval  from the National Company Law Tribunal (NCLT) to move its holding company from  Singapore back to India. This is an important step in the company’s efforts to adjust its corporate structure to better fit its focus on India, especially as it prepares for a possible  initial public offering (IPO) in the country. 

The NCLT approval removes a key legal barrier in Flipkart’s planned “reverse flip,” where  ownership of its overseas holding company will be transferred to an Indian entity. Sources  say this will allow Flipkart to continue with the necessary regulatory steps to complete the  transition. 

Earlier this year, Flipkart announced its plan to shift its legal base to India as part of a  strategy to simplify its structure ahead of a future public listing. Although the company did  not provide a specific timeline for the IPO, it highlighted the importance of aligning its base  with its main business operations. The Economic Times was the first to report on the NCLT  approval. 

Importance of NCLT Approval 

With the tribunal’s approval, Flipkart can now officially start the reverse flip process, which  will consolidate its structure under Indian law. This change is expected to make it easier to  comply with regulations and align with India’s corporate governance standards, which is  crucial for companies looking to enter the domestic capital markets.

Flipkart had moved its headquarters to Singapore in 2011, a common practice for Indian  startups at that time. This structure helped tech companies access global investors and raise  foreign capital more efficiently. However, in recent years, India’s capital markets have grown  significantly, making local listings more appealing for established startups. 

Tax Implications and Industry Context 

The decision to return to India is also likely to have important tax consequences. Reports  have shown that several Indian startups, including Meesho, Groww, and Razorpay, paid  nearly $600 million in taxes to complete similar moves. These tax costs mainly come from  capital gains during the transfer of shares from foreign entities to Indian ones, especially  when company valuations have increased. 

While Flipkart has not shared the tax costs involved in its move, analysts believe that, given  its size and valuation, the amount could be significant. However, industry experts note that  large startups often consider these short-term tax costs against long-term benefits like easier  compliance, better investor confidence, and smoother access to Indian public markets. 

Precedents and IPO Outlook 

Flipkart’s decision follows a similar move by PhonePe, another Walmart-owned company,  which relocated to India in 2022 and incurred a substantial tax bill to do so. The success of  such transitions has encouraged more Indian consumer internet companies to think about  reverse flips as part of their growth and listing plans. 

This shift comes at a time when IPO activity in India’s consumer technology sector is gaining  momentum. As market conditions improve and investor interest rises, Flipkart is reportedly  focusing on operational efficiency, profitability, and key business areas. Competing directly  with Amazon in India’s competitive e-commerce market, this structural change is seen as a  strong indication of Flipkart’s intent to pursue a domestic listing when the market is right. 

Conclusion 

Flipkart’s NCLT approval to move its base back to India is a crucial step in its long-term  growth and IPO strategy. By aligning its legal structure with its main market and operations,  the company is better positioned to meet regulatory requirements, build investor trust, and  engage more effectively in India’s evolving capital market.