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Why are the rich leaving India?
Summary
India is expected to lose 6,500 high net-worth individuals, worth $1 million or more this year, according to Henley and Partners
India is expected to lose 6,500 high net-worth individuals (HNWIs), worth $1 million or more this year, according to Henley and Partners, an advisory firm on investment-linked visas. Is this a high number, and what drives their decision to move? Mint explains:
How large is India’s exodus of the rich?
In 2023, India will be the second-biggest loser of millionaires, after China’s net outflow of 13,500. Last year, India lost 7,500 HNWIs, the 3rd highest after China (10,800) and war-wrecked Russia (8,500). Between 2013 and 2022, India lost 48,500 HNWIs, says data compiled by Henley and Partners. The report said “these outflows are not particularly concerning as India produces far more new millionaires than it loses to migration". That is true: the net loss in 2023 is just 1.9% of the total number of resident millionaires, 344,600. However, the overall number, too, saw a slight decline from last year’s 357,000.
Why are HNWIs leaving India?
“Prohibitive tax legislation" and “convoluted, complex rules relating to outbound remittances", says the report. This year’s union budget reduced the surcharge for those earning more than ₹5 crore, cutting the top rate of tax from 42.7% to 39% under the new tax regime. It might have come as a relief but there are other concerns. For instance, the recent increase in tax collected at source from 5% to 20% on all foreign remittances above ₹ 7 lakh except for education and medical bills. The rich seek to live in other countries for non-monetary reasons too—such as children’s education, social security and a better lifestyle.
Where’s everyone moving?
The US, Canada and Australia continue to be the top destinations not just for the rich but for Indians from lower income brackets as well. Higher education and career prospects in these countries drive the demand. Tech entrepreneurs and wealthy Indian families also set up their businesses and offices in Dubai and Singapore to access a larger market and robust banking solutions.
Is it easier for the rich to emigrate?
Yes. Countries offer an easier visa route for those willing to make an investment or set up a businesses. The US EB-5 immigrant investor programme, for instance, offers a far smaller queue than other routes to get a green card for a minimum investment of $800,000. The UAE’s Golden Visa grants renewable residence for up to 10 years with a minimum investment of $550,000. Indian millionaires sometimes move to exotic locations or tax havens such as Portugal, Greece and Monaco, albeit in a smaller number.
Should India allow dual citizenship?
Investment migration is certainly a drain, but also a reality. This loss is somewhat offset by remittances, growing connections of trade, foreign investments and tech transfers from destination countries. While most Indians opting for permanent residence elsewhere do not necessarily surrender their passport or take up new citizenship, many do—after living abroad for many years. In such a scenario, a dual citizenship would have allowed them to hold on to their Indian passport, as many would like to do.
