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RSS affiliate Swadeshi Jagran Manch opposes direct overseas listing of Indian start-ups: Report

The organisation accused startups of trying to avoid India’s regulatory landscape by ‘flipping’ to foreign jurisdictions.

Swadeshi Jagran Manch (SJM), the political and cultural wing of the Rashtriya Swayamsevak Sangh, has opposed the direct listing of Indian unicorns in overseas markets without listing on domestic bourses, according to a report by Business Standard. The organisation argued that such listings lead to Indian authorities losing their ability to enforce oversight and tax the gains accrued by businesses built in the country, the report added.

Ashwani Mahajan, National Co-Convener of SJM, said that initial public offerings of Zomato, PayTM, and Nykaa, prove that Indian capital markets do not lack depth. He said the argument that the Indian capital market lacks liquidity is misplaced as Zomato’s IPO saw over 33 percent of anchor investors from India, Business Standard reported.

“Swadeshi Jagran Manch is deeply concerned to note that a huge number of unicorns, which have grown in the last one decade, have either flipped abroad or have been incorporated overseas,” Mahajan said.

SJM’s remarks are indicative of RSS’s stance on various policy measures under consideration of the Indian government. India’s ruling party, Bhartiya Janata Party, is an affiliate of RSS which means that the latter possibly holds tremendous sway over policy decisions.

‘Detrimental to India’s economic interests’

Mahajan said that the law does not permit direct listing of Indian companies on foreign bourses without listing domestically first, as per a report in NDTV.

“However, if the startups are allowed to list their shares overseas, it may be detrimental to India’s economic interests in general and will adversely affect the exchequer and will have an impact worse than even the flipping,” he said.

What is flipping? Flipping refers to domestic startups housing their shareholding, intellectual property (IP) and at times even other assets in a firm overseas, and relegating the local entity to a subsidiary.

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Some of the preferred destinations include Singapore, the United States and the United Kingdom, NDTV wrote in its report. Mahajan charged that unicorns flip on the insistence of the foreign investors who want to avoid the Indian regulatory landscape.

‘Loss to exchequer is to be avoided’

Mahajan said that the country needs a mechanism where foreign stock exchanges will have to administer Securities Transaction Tax (STT) and investors will need PAN registration in order to offset loss to the exchequer, the report added.

RSS’ objections to burgeoning tech industry

“There are efforts to institute anarchy in the country. and technology is adding fuel to the fire,” Mohan Bhagwat, the head of the RSS, had said in a speech on October 15 last year, urging the government to regulate content on OTT platforms, cryptocurrencies as well as narcotics.

In his speech at the Nagpur headquarters of the RSS, the Sangh leader flagged that kids increasingly have unregulated access to OTT content. Bhagwat also pointed out that currencies such as Bitcoin are not regulated by any country or law, and hence must be urgently regulated.

“What kinds of images are shown on OTT platforms? After Corona, kids have mobile phones, they also watch online. What they see and what they don’t is not regulated […] There are different kinds of addictive drugs that are coming, people are increasingly falling into drug habits […] Currencies like Bitcoin – which country, which laws have oversight over it, I don’t know. Keeping these issues in mind, the government must issue regulations for the benefit of society.” — Mohan Bhagwat said.

Ball is now in lawmakers’ court: SJM

Mahajan had tweeted “I call upon people of this country to #boycottAmazon.” after a Reuters investigation revealed that Amazon India copied top-selling products systematically using data that is not available to other sellers and manipulating search results to promote these products over those of competitors.

Why is no one questioning the company? In a follow-up tweet, Mahajan added: “Happy that when Amazon lies, ppl are questioning them in US. In India they have been lying, lying and lying, but no body qns them. Perhaps ₹8456 crores play trick,” referring to the recent bribery allegations.

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I cover several beats such as Crypto, Telecom, and OTT at MediaNama. I can be found loitering at my local theatre when I am off work consuming movies by the dozen.

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

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