Sameer Nigam, chief executive of Walmart-owned PhonePe, said regulations on company relocation to India should be easier for companies.
“I think the law needs to be changed because it is not progressive and discourages new India-based companies from relocating. Our investors paid nearly Rs 8000 crore in taxes just to allow us to return to India, and that is quite a shock if the business is not yet mature and an IPO is a few years away,” Nigam said.
He added that PhonePe also had to convince thousands of employees that they will go back to zero grandfathering for a year after the address change. This is because Indian law says that if a company migrates the ESOP plan, it must start with a new one-year cliff.
Furthermore, Nigam said that this address change has also put PhonePe in the position of losing $900 million of cumulative losses by the end of March 2023 because Indian law considers the address change as a restructuring event. Essentially, there is no distinction in law between a restructuring in which the prior and subsequent beneficial owners are the same as compared to another acquisition event.
In general, Indian for-profit start-ups that do not have to relocate and have the opportunity to offset some taxes when the business becomes profitable. However, PhonePe will not be able to take advantage of this benefit, Nigam said.
Speaking at a YouTube live session hosted by the company on Wednesday, Nigam also highlighted that some 20 unicorns new to India are interested in relocating to India and have already contacted PhonePe to inquire about the process. She was answering questions about PhonePe’s $350 million fundraiser, the company’s change of domicile from Singapore to India, and its future plans.
Speaking about the reason for the change of address, Nigam said: “I think that for the mission PhonePe is on, which is to solve financial inclusion and digitization on a large scale, the move to India was right; India is where we started and where we focus. And to that end, for various reasons, such as being a highly regulated entity and wanting to eventually list here, PhonePe’s change of address as a business and as a company is the right response.”
Additionally, PhonePe CTO and Co-Founder Rahul Chari spoke about the company’s future plans, saying that the company wants to play a major role in fulfilling the ambition of bringing digital payments in India to 1 billion transactions per day. , close to half a trillion, with NPCI, RBI and the entire fintech ecosystem.
“We really want to help scale payments with a lot of new initiatives coming up at UPI. We’ll look at launching new products and offerings, whether it’s merchant lending, consumer lending, many new open API initiatives like account aggregator and ONDC. I think India is going to explode on the digital front and with the kind of patient capital backing us, we would love to play a small role and move that over time,” Chari added.
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