Why many Indian start-ups are registering overseas and not in India

The grass is always greener on the other side. But what if you could get yourself a piece of that green grass from several pastures to hedge against a rainy day?

That seems to be the thought process across the spectrum of business owners, new-age entrepreneurs, corporate executives and skilled professionals, especially after the pandemic rudely awoke them to the risks of putting all their eggs in one basket.

The latest entrant to this trend is the start-up community, who, keen on multiple residencies, are opting for structured residency investment programmes in countries like Portugal or Malta or the business and talent-based visas offered by the UAE or Australia and Singapore, respectively. But, as the experts explain, they lean more towards the latter because they don’t want their capital locked in investment programmes.

Also Read: Thousands of rich Indians are looking overseas for business, and also to pursue a better quality of life

For start-ups, a friendlier business environment, easier access to cheaper capital and talent as well as an openness to emerging fields such as crypto, fintech and Web3, are the primary attractions abroad. As per Henley & Partners’ ranking, Singapore and UAE are the top choices at the moment for entrepreneurs.

One edtech start-up founder, who moved to Dubai in 2016 to expand operations, says on the condition of anonymity that he is definitely noticing more entrepreneurs leaving through these routes today than before, although he himself did not go by this route. “In India, valuation rules, approvals and the trouble you can get into if something is interpreted wrongly because of arbitrary tax rules are all threats,” he says. According to him, water-tight documentation between the investor and the founder is enough to keep such distractions at bay in Singapore or Dubai. Besides, their low-tax regimes for an individual are an added advantage.

Earlier this year, for example, the founders of the Indian cryptocurrency exchange WazirX, Nischal Shetty and Siddharth Menon moved to Dubai after regulatory uncertainties in India around the virtual currency. Crypto start-up Polygon’s founder Sandeep Nailwal too reportedly relocated to the Middle Eastern country two years ago. In fact, in an interview with Bloomberg this March, the entrepreneur had complained about the “crazy” crypto brain drain presently playing out in India. BT’s attempts at contacting him for comment were unsuccessful.

Given entrepreneurs’ power to create jobs, countries like Canada and the UK are also wooing them with easy start-up visas. “So many people in India are looking at the UK and Canada start-up visas, which just need an innovative idea that can be turned into a business,” says Clint Khan, Director, Y-Axis Middle East DMCC, an immigration and visa consultant services company. While India boasts of achievements like the ease of doing business, many regulations can be cumbersome, especially if one wants to scale up or diversify, experts point out. No wonder, therefore, that whether it is a legacy business owner or an entrepreneur, offshore jurisdictions do prove to be much easier at times.