Introduction: The Dynamic US-India Investment Corridor
Driven by global aspirations, Indian enterprises have long sought engagement with international capital markets. Historically, many emerging Indian startups and established corporations, particularly in the technology sector, strategically “flipped” their corporate domicile to offshore jurisdictions like the United States or Singapore. This realignment was fundamentally motivated by the pursuit of deeper capital pools, perceived regulatory efficiency, attractive valuations, and greater appeal to international investors familiar with foreign corporate structures.
However, a “reverse flip” phenomenon is now unfolding. Many Indian companies with prior international footprints are “internalizing” or redomiciling back to India. This shift is propelled by India’s maturing domestic capital markets, robust investor confidence, and proactive regulatory reforms. Yet, despite this “homecoming,” the allure of US capital markets remains potent for many Indian entities seeking unparalleled global visibility, diverse investor bases, and strategic growth.
Whether the objective is an Indian listing via a reverse flip or a direct/indirect US public offering, one constant is paramount: a US entity within the corporate architecture necessitates rigorous corporate legal due diligence under US law. This diligence is not mere procedural compliance; it is fundamental for long-term viability, regulatory adherence, and investor confidence in the unified enterprise.
Recent Commercial & Industry Updates in the US-India Corridor: A Shifting Tide
Key Sectors Driving Activity: Cross-border activity spans multiple industries, but technology remains the leading sector, particularly SaaS, Artificial Intelligence (AI), deep tech, and cybersecurity, where US investors are actively seeking innovative Indian partners. Fintech continues to drive strong interest, propelled by India’s rapid adoption of digital payments. Clean energy (including renewables & ESG initiatives) and advanced manufacturing (notably semiconductors and EV components) are attracting significant investment, driven by global supply chain diversification and sustainability mandates. Healthcare and life sciences also remain resilient, with ongoing investments in both R&D and commercialization.
Notable Deals and Trends: The “Reverse Flip” and Sustained US Engagement The most salient trend reshaping the US-India corridor is the “reverse flip” back to India, often signaling intent for a prospective Indian IPO, while keeping certain US operational subsidiaries within the global structure. Some recent market examples include:
- PhonePe: The Walmart-backed fintech leader, completed its reverse flip from Singapore to India in October 2022, solidifying its roots closer to its customer base and the burgeoning domestic capital market.
- Groww: This fintech unicorn similarly executed a successful reverse flip from the US to India in March 2024, repatriating its corporate structure.
- Zepto: The quick commerce innovator, completed its reverse flip from Singapore to India in January 2025 after formal approvals, signaling a clear path for an Indian IPO.
- Pine Labs: This payment solutions provider secured NCLT approval for its cross-border merger into India in April 2025, with final Singapore approvals pending.
These instances highlight a strategic re-evaluation by Indian companies, prioritizing robust domestic growth and investor appetite. While “reverse flips” entail intricate US and Indian tax considerations, streamlined compliance and leveraging domestic market sentiment are increasingly persuasive.
The Legal Deal Landscape: How Laws and Regulations are Shaping Transactions
Impact of Indian Regulatory Changes:
The Indian government and regulatory bodies have fostered the “reverse flip” trend through progressive reforms, significantly streamlining redomiciling to India. Notably, the September 2024 amendment to Rule 25A of the Companies (Compromises, Arrangements and Amalgamations) Rules introduced a fast-track reverse merger process, allowing foreign holding companies to merge with wholly-owned Indian subsidiaries without lengthy National Company Law Tribunal (NCLT) approvals.
Further initiatives by the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) have enhanced regulatory clarity and ease of doing business. Recent SEBI approvals include easing rules for startup ESOPs (requiring a one-year gap before IPO filing), simplifying voluntary delisting for PSUs, and streamlining rules for foreign investors in government bonds. They also allow Alternative Investment Funds (AIFs) to facilitate co-investments via separate vehicles. Collectively, these reforms signal India’s commitment to creating a predictable and efficient environment for Indian-origin companies to anchor operations and capital market presence domestically.
Impact of US Legal and Regulatory Landscape (Continued Vigilance for US Exposure):
Even amidst the “reverse flip” trend, the intricate framework of US legal and regulatory systems remains paramount for any Indian entity with US corporate exposure.
- SEC Scrutiny on Foreign Private Issuers (FPIs) and Reverse Mergers: The US Securities and Exchange Commission (SEC) continues to apply stringent disclosure and reporting standards for FPIs, with particular focus on issuers accessing public markets via reverse mergers. In June 2025, SEC released a Concept Release on FPI Eligibility that explores potential changes to the FPI definition and accommodations, including possible thresholds for public float, trading volume, and revenue-generating activities. If these ideas move forward, existing FPIs and non-US issuers considering a US listing could face tighter eligibility tests or additional reporting.
- Delaware General Corporation Law (DGCL) Updates:
- March 2025 Amendments to DGCL Section 144 (Conflicted Transactions): These amendments overhaul the legal framework for conflicted transactions between corporations and their directors, officers, and controlling stockholders. They establish more explicit statutory “safe harbors” for such transactions, providing clearer pathways to achieve “cleansing” and potentially shifting judicial review to business judgment, provided meticulous procedural safeguards (e.g., independent committee approval) are observed. This impacts how related-party transactions, common within multinational groups, must be structured and approved for US entities.
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- 2024 Amendments to DGCL Section 122(18) (Stockholder Agreements): In response to the Delaware Court of Chancery’s 2024 ruling in West Palm Beach Firefighters’ Pension Fund v. Moelis & Co., which questioned enforceability of certain governance provisions impinging on board authority, Section 122(18) was amended. Effective August 1, 2024, this amendment clarifies a corporation’s statutory power to enter agreements with stockholders granting specific control rights, enhancing predictability. This is highly pertinent for pre-IPO shareholder agreements or other governance arrangements delineating control and decision-making within the US entity post-transaction.
Setting the Stage for Legal Diligence
The US-India investment corridor is characterized by flux. While the “reverse flip” trend underscores India’s burgeoning strength and appeal, the strategic imperative of a US corporate presence for global expansion and diversified capital access remains undeniable for numerous Indian enterprises. For any Indian entity that possesses or contemplates establishing a US corporate vehicle as an integral component of its journey to public markets, rigorous corporate legal due diligence under US law is not merely an option, it is a mandatory and critical foundation.
Our forthcoming article will delve into essential legal due diligence areas pertinent to the US entity: corporate governance, securities compliance, intellectual property, litigation, employment matters, and tax considerations. We will explore why each area is paramount, what experienced legal counsel examines, and how diligently addressing these pivotal points paves the way for a successful and compliant public listing.
Chirag Jain is a attorney with KPPB LAW specializing in corporate law and investment management. Contact Chirag at cjain@kppblaw.com.
