The Great Boomerang: How India's Web3 Talent Is Circling Back - Remotely

In the two years after India imposed a 30 % flat tax and a 1 % transaction-tax (TDS) on crypto gains (April 2022), a visible migration of Web3 start-up founders to Dubai, Singapore and, to a lesser extent, Hong Kong made headlines. Yet new developer-census data show that the underlying engineering base never really left India—and is now growing again even as many founders keep their holding companies abroad.

What the head-count numbers say

*Source: *Electric Capital Developer Report 2024 (published Jan 2025). The study counts monthly active GitHub accounts that commit to public crypto repositories. India’s share has risen 26 % since the 2022 tax took effect.

NASSCOM’s India Web3 Landscape 2023 adds colour: more than 450 active Web3 start-ups and >75 000 blockchain programmers were on record by the end of 2023, up from 25 000 in 2020.

Why founders still register abroad

Regulatory clarity. The UAE’s Virtual Asset Regulatory Authority (VARA) issued 25 full licences by May 2025, six to entities with Indian founders. India still has no equivalent regime; exchanges face a 30 % gains levy plus 1 % TDS on every sell order.

Bank access. Dubai banks service crypto operating accounts; in India many private lenders remain cautious after repeated RBI advisories on “virtual-asset risk.”

Capital. A May 2025 PitchBook data cut shows that 38 % of the US $650 m raised by India-led Web3 start-ups since 2022 closed through overseas holding companies.

But incorporating overseas no longer means relocating entire engineering teams.

The hybrid structure that now dominates

1. HoldCo in Dubai or Singapore – benefits from zero (or low) capital-gains tax and clearer VASP licensing.
   
   

2. Indian development centre – registered as an IT-export entity in Bengaluru, Hyderabad or Pune; bills the parent in USD.
   
   

3. Remote-first culture – devs paid in rupees, option grants held offshore.

Cost arbitrage is obvious: Electric Capital’s salary benchmark tool (April 2025) pegs a senior Solidity engineer at US $55 000–60 000 in Bengaluru versus US $120 000+ in Dubai. A 15-person tech team can extend runway by more than a year by staying in India.

Signals that the “boomerang” is real

• Hiring data. LinkedIn’s March 2025 Future of Work: India update shows a 39 % year-on-year rise in domestic job posts tagged “Solidity” or “Rust” since Q1 2024, compared with 6 % growth in the Middle East.
• VC term-sheets. Middle-East investors such as Cypher Capital and Woodstock Fund now list “India-based engineering hub” as an operational assumption in pitch-decks reviewed by The Ken (Jan 2025).
• Government interest. India’s Ministry of Electronics & IT floated a February 2025 discussion note on a “reverse brain-drain incentive”: up to 50 % GST rebate on export services for Web3 firms that house intellectual-property and payroll in India. The note is still in stakeholder consultation.

Upside—and friction—of the new model

What it means for Hong Kong and global investors

Hong Kong funds already run a “Central–Shenzhen split,” raising capital in the SAR while coding across the border. The India-Dubai hybrid is the same playbook stretched across 2 000 km. For allocators, diligence now includes:

• Verifying India-side IP assignment to ensure future flip feasibility.
• Checking whether invoice flows trip FEMA export-service caps.
• Confirming staff are paid in rupees, not tokens, to avoid RBI scrutiny.

Outlook

Unless India’s long-promised Virtual Digital Assets Bill lands in 2026 with a friendlier tax regime and a clear exchange licence, founders will likely keep their corporate roots in zero-tax hubs. But the code is still being written—and increasingly scaled—inside India. For the domestic economy that may be a tolerable compromise: brains stay home, capital circulates back as export revenue, and policymakers retain the option to invite headquarters back once the rulebook is ready.

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