Building for India but incorporating outside India is a disturbing trend
New startups building for India but incorporating outside India is a disturbing trend. While even now startups are largely funded by foreign VCs, there is wealth creation in India through Founders, Angels, & ESOPs. Also, the taxes on realized capital gains benefit India.
Since most startups now prioritize growth over profits, there’s typically no income tax in India. Now if all wealth creation and capital gains are also captured outside, it is like that dialogue from Swades - “Apni chaukhat ka diya, giving light to neighbour’s house”.
It’s impossible to ensure that there is no tax arbitrage by incorporating outside. But our Govt should do whatever it takes to improve on the ease of doing business & create reasons for foreign investors to nudge founders to be incorporated within India & not outside.