Bhai - Is Logic Se...: Ashneer Grover Hits Back At Nithin Kamath, Questions Dividend Vs Capital Gains Logic In India’s Startup Ecosystem

New Delhi: Ashneer Grover, co-founder of BharatPe, jumped into a debate with Zerodha’s Nithin Kamath on X, pushing back against the usual wisdom that capital gains matter more than dividends in Indian startups. Kamath argued that investors should just focus on building long-term wealth through capital gains, not get distracted by dividends. Grover, though, wasn’t convinced. He questioned whether that line of thinking actually benefits anyone—investors, founders, or the whole startup scene.

Let’s talk taxes for a second. Grover pointed out a huge gap: dividends in India get hit with an effective tax of about 52 percent (that’s 25 percent corporate tax, plus another 35.5 percent at the personal level), while capital gains—after all the cesses and whatnot—are taxed at just under 15 percent. That’s a massive difference, and it pushes investors and startups to care more about selling shares at big valuations than about making real profits and paying out dividends. Grover’s not a fan. He warned that if everyone just follows Kamath’s logic, it’ll wind up encouraging a race for short-term growth, not the kind of steady, sustainable profits that actually last.

Grover didn’t stop there. He took aim at the whole VC-backed startup playbook, where companies intentionally show tiny profits—or even losses—on purpose. The idea is to spend big on marketing and user acquisition, bump up the company’s valuation, and then cash out with lower taxes on capital gains. This approach, Grover argued, traps startups in a cycle where they’re always burning cash to keep up with rivals. It sounds exciting when you see those sky-high valuations, but when markets get tough, these companies can struggle to survive.

All of this, Grover said, has bigger consequences for the entire startup ecosystem. Startups get stuck burning money just to chase growth, even if it makes no sense in the long run. Sure, the numbers look great on paper, but it’s not a recipe for staying power. He suggested that if investors actually demanded dividends—real, regular returns—instead of only caring about capital gains, companies like Zerodha would have to rethink how they operate and deliver returns.

Grover’s response to Kamath has kicked off a fresh conversation about what really matters in India’s startup world: profitability, taxes, investor expectations—the whole package. He’s not saying growth and big valuations don’t matter. But if nobody’s paying attention to building real profits and having smart dividend policies, the whole ecosystem ends up full of businesses that might not survive the rough patches. It’s a call to rethink the strategy before the next storm hits.