For years, founders of Indian startups have believed that incorporating their ventures in Singapore or the US would make fundraising and exits easier for them. The mindset, however, is outdated today, according to Snapdeal Co-founder Kunal Bahl. Setting up business in India is more than just a patriotic move – today it is a pragmatic decision, believes Bahl as he outlines compelling reasons in a post on X for founders to choose India over other countries for registering their startups:
Funding no longer an issue
Startups don’t have to incorporate themselves overseas for easier fundraising ability. According to Bahl, Indian investors now back all kinds of startups, including deeptech and AI, unlike probably a decade back when startups had to look abroad for a better fundraising environment.
Favorable policies
Bahl highlights startup-friendly tax policies, DPIIT (Department for Promotion of Industry and Internal Trade) benefits, and simplified compliance processes by the Indian government that can help founders to start and grow from India. In contrast, incorporating in the US or Singapore can lead to double taxation and regulatory complexities that founders can easily avoid by registering in India.
Simplified Compliance
It makes sense to incorporate in India if a startup’s customers, revenue, and operations are in India. Bahl says being registered in India simplifies compliance, contracts, and access to government incentives. Moreover, as an Indian entity, one can sell to global markets by establishing a subsidiary overseas. “Infosys does it and so can you.”
Easier exit
Successful startup IPOs such as Zomato, Nykaa, and Unicommerce indicate that the Indian stock market is more than ready for startup. If an Indian startup plans to go public, incorporating locally prevents costly and complicated “flipping” of the company’s structure later, according to Bahl.
Regulatory hassles abroad
Establishing a company in the US or Singapore may look easier initially, but there could be legal complexities, compliance costs, and difficulties in repatriating money to India in the long run. Startups often realize too late that navigating through foreign regulations can be a burden.
Better access to domestic capital
For Alternative Investment Funds (AIFs) to fund companies based in foreign markets require approval from market regulator SEBI. Hence, if your startup is incorporated overseas, you risk losing out on a massive chunk of domestic institutional funding. “You will lock out most of the Indian VC capital by incorporating overseas!”
Angel investments
If your startup is at an early stage and incorporated abroad, angel funding may become a challenge as many Indian angel investors cannot invest significant amount in overseas startups due to the Reserve Bank of India’s (RBI) Liberalised Remittance Scheme (LRS) limits.
Under the scheme, all resident individuals, including minors, are allowed to freely remit only up to $2,50,000 per financial year. Hence, if you want funding from Indian angels, incorporating in India is the better choice.
Less competition for capital
If you stay in India and pitch to Indian VCs, it means you are competing with other Indian startups, whereas going to the US means competing globally for capital, making fundraising harder for yourself. “For Indian startups in 2025, the choice is clear: Incorporate in India, Build in India, Win in and from India,” says Bahl.