According to a new report, atleast 8,000 super rich Indians are expected to migrate out of the country this year owing to a multitude of reasons.
According to a recent study, up to 8,000 high-net-worth individuals could leave India by 2022, reports The Times of India.
According to the most recent Henley Global Citizens Report, which monitors private wealth and investment migration patterns globally, strict tax laws and disclosure obligations in India, together with a desire for stronger passports, continue to be the key factors driving departure.
According to the report, young tech innovators are growing more and more international as they continue to aspire to access global business and investment possibilities and exhibit an ever-increasing stomach for hazard.
Furthermore, the analysis showed that over the next ten years, the number of US dollar millionaires and billionaires in India will increase by 80%, opposed to just 20% in the US and 10% in France, Germany, Italy, and the UK.
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However, according to the most recent estimates for 2022, India would see a net loss of about 8,000 US millionaires this year (i.e., the difference between the number of high net worth persons who move to and the number who depart from a nation).
“These outflows are not particularly concerning as India produces far more new millionaires than it loses to migration each year. There is also a trend of affluent individuals returning to India and once the standard of living in the country improves, we expect wealthy people to move back in increasing numbers.
“General wealth projections for India are very strong. We expect the HNWI (high net worth individuals) population to rise by 80% by 2031, which will make India one of the world’s fastest growing wealth markets during this period. This will be fueled by especially strong growth in the local financial services, healthcare, and technology sectors,” said Andrew Amoils, Head of Research at New World Wealth.
Singapore and UAE biggest wealth magnets
According to projections on the Henley Private Wealth Migration Dashboard, the UAE is anticipated to draw the greatest net inflow of HNWIs worldwide in 2022 (at least 4,000).
With estimated net inflows of 2,800 this year, Singapore is ranked third after Australia (3,500).
Israel comes in at number four with a ranking of 2500, followed by Switzerland at 2200 and the US at 1500.
“We are also starting to receive considerable interest from families from across Asia who are looking to make Singapore or the UAE their established base. Countries that are providing excellent infrastructure for wealth preservation are likely to remain popular destinations,” said Nirbhay Handa, Group Head of Business Development at Henley & Partners.
But why are India’s rich leaving the country?
A new crop of tech entrepreneurs, eager to diversify a portion of their fortune in jurisdictions presenting a plethora of benefits and high tax efficiency, has joined the old base of industrialists, who remain the same.
“The appeal of a higher standard of living, including better educational and health facilities for the family, also continues to be a key driver, perhaps even more so in the wake of Covid.
According to Bijal Ajinky, Partner in Khaitan and Co.’s Direct Tax, Private Client, and Investment Funds Practices, “Increasingly stringent tax residency rules (introduced in 2020 and 2021), with no relief in individual taxation rates for HNWIs, coupled with a desire for visa- free travel are also consistent primary motivators for alternative residence and citizenship.”
Where are they migrating to?
EU nations, as well as longtime favorites Dubai and Singapore, are now the best options for Indians.
The sturdy judicial framework and accessibility of world-class financial advisors in Singapore make it a popular location for tech entrepreneurs and for establishing family offices, but the Dubai Golden Visa has gained favor in many circles for its simplicity of application and the variety of possibilities it presents.
Others looked to Europe, particularly the Mediterranean nations like Portugal, Malta, and Greece because they offer a route into the EU, a living standard that is aspired to, and generally have a low physical residency requirement. These factors are significant to those who continue to place more importance on their families or business interests in India.
What are the challenges?
“Challenges for Indians include stringent exchange controls for making remittances, inheritance taxes for overseas assets, and Indian residency rules targeting statelessness. Indians are progressively turning to legal and financial advisors for nuanced advice on navigating these obstacles through the use of private trusts, holding entities, separate wills for different jurisdictions, and so on. Individuals are advised to start planning well before they intend moving any capital to avoid any unpleasant surprises,” said Ajinky.