Startups are typically founded at the home place of the founders – founders are comfortable with the culture, aware of the laws of the land, a ready network of contacts, and in India‘s case a fairly large market and cheap skilled labour – over and above the soft factors of being near your loved ones.
However, a number of startups, especially those with globalized markets and significant value in intellectual property, tend to move out of India. There is a mass exodus of startups started in India to places like USA and Singapore. The number of reasons are many – complex regulations and taxation laws, paperwork, poor IP protection, higher tax rates, favourable laws abroad, large markets and higher valuations to companies based abroad.
We recommend a more nuanced approach to the problem. Each business is different and companies should consider multiple factors while choosing which country suits them best. Further, one can register a company in a favourable country abroad (Typically – Delaware,US; Singapore) and register another entity in India and both companies can have a interlinked corporate structure. Companies can take the advantages of both the worlds by this approach.
To read more in detail about the typical problems faced by startups in India, read more on here