Stringent tax rules and need for stronger passports are among reasons that are likely to trigger a migration of around 8,000 high net-worth individuals (HNI) from the country in 2022, a survey has found.
HNI is used to define people who hold financial assets over 1 million USD.
The 2018 Henley Global Citizens Report, which tracks global private wealth and investment migration trends, says while the old industrialists choose to stay in India, the younger lot wants to take risks and diversify business abroad, and reap the benefits and lenient tax rates offered by other countries.
Higher standard of living, better educational opportunities for children and advanced healthcare system abroad are also reasons that are drawing the rich to other countries.
“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,” Bijal Ajinky, a partner in the Direct Tax, Private Client and Investment Fund Practices of Khaitan and Co. told Economic Times.
Where are the rich migrating to?
Dubai, Singapore and countries in the European Union are among the most coveted destinations for rich Indians to settle abroad.
A strong legal system offered by Singapore apart from access to world-class financial advisors makes the country a popular choice for digital entrepreneurs and family offices. Dubai’s Golden Visa, a long-term residence visa, which allows foreigners to live, work and study in the UAE, is attracting Indian families to the country.
According to Henley Private Wealth Migration Dashboard, the UAE is likely to draw the highest HNWI inflow globally (of at least 4,000) in 2022. It is followed by Australia (3,500), Singapore (2,800), Israel (2,500), Switzerland (2,200) and the United States (1,500).
According to reports, Singapore and the UAE are also the first preference for several HNIs in other parts of Asia as they provide reliable infrastructure for wealth preservation.
Other preferred destinations include Mediterranean countries like Portugal, Malta, and Greece as apart from being gateways to EU, they offer high standard of living and low physical residency requirement – a must for those who want to shuttle between India and their foreign home.
Is migration harmful for India?
The migration, however, is unlikely to affect the general wealth projections for India as the number of millionaires and billionaires bringing US dollars to the country is expected to grow by 80 per cent in the next 10 years, compared to a marginal 20 per cent hike in the US and 10 per cent growth in France, Germany, Italy and the UK.
“General wealth projections for India are very strong. We expect the HNWI population to rise by 80 per cent 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,” New World Wealth’s head of research Andrew Amoils told The Economic Times.
This adding to the fact that India creates more billionaires every year than it loses to migration.