A recent poll suggests that up to 8,000 high-net-worth individuals might leave India in 2022. According to the 2019 Henley Global Citizens Report, which tracks private wealth and investment movement patterns internationally, strict tax restrictions and reporting requirements in India, as well as the need for better passports, continue to be the key driving forces behind the migration.
According to the survey, a growing number of young entrepreneurs are looking into international business and investment opportunities while exhibiting an ever-increasing stomach for risk.
According to the research, the number of millionaires and billionaires earning in US dollars would increase by 80% in India over the next ten years, but only by 20% in the US and 10% in France, Germany, Italy, and the UK.
“India’s projected general wealth is quite robust. By 2031, we project the number of HNWIs (high net worth people) will have increased by 80%, making India one of the world’s fastest-growing wealth markets. The local financial services, healthcare, and technology industries will have a particularly rapid expansion, which will fuel this “Andrew Amoils, the head of research at New World Wealth, said.
But why are India’s richest people leaving the nation?
With the aim of diversifying a portion of their income in countries that provide the majority of benefits and low tax rates, a new generation of digital entrepreneurs is entering the ranks of the old industrialist base.
The appeal of a higher standard of living also persists as a strong motivation, maybe even more so in the aftermath of Covid, especially with regard to improved family-oriented educational and medical facilities.
The wealthy in India are migrating in quest of more safety and security, superior medical care and educational opportunities, climatic resilience, and crypto friendliness. Although these problems are not new, the current socio-political climate may have made people’s anxieties more acute.
While India is experiencing an upsurge in street-level violence, police brutality and abuses against civilians without following due process are also on the rise. Additionally, certain groups of people have been actively promoting and committing hate crimes against minorities.
Recent protests against comments made by two BJP politicians against the Prophet Mohammad in Ranchi, the capital of Jharkhand, descended into violence, and two youngsters were murdered in police fire.
Additionally, there has been an increase in prejudice against minorities, particularly Muslims. There have been vocal demands in the past to shun Muslim merchants and companies. The unstable social climate in India has been made worse by all of this.
The country of India has a problem with its infrastructure. Infrastructure in India, particularly in terms of public facilities, remains shoddy despite decades of planned investment as well as cooperative partnerships with private actors after liberalization.
Except for some of the disadvantaged and government employees, education and healthcare services in India continue to be largely privately sponsored. Both have seen significant price increases recently, but the quality is still questionable.
Even though it is unclear how its digital currency policy will be implemented, the Indian government has taken a position against cryptocurrencies. Currently, investments in cryptocurrencies are subject to a steep capital gains tax of 30% plus surcharge and cess.
According to studies, India will experience an increase in temperature, harsh weather, and sea level over the coming decades as a result of climate change. Reports claim that climate change contributed significantly to the brutal heat wave that burned the subcontinent in March and April this year. It is widely known how increasing temperatures, which this year in several regions of the nation exceeded 40 degrees Celsius, affect how productive people are.
According to Bijal Ajinky, Partner in Khaitan and Co.’s Direct Tax, Private Client, and Investment Funds Practices, “increasingly strict tax residency rules (introduced in 2020 and 2021), with no relief in individual taxation rates for HNWIs, combined with a desire for visa-free travel, are also consistently primary motivators for alternative residence and citizenship.
Where are they migrating?
Indians are becoming more interested in traditional favourites Dubai and Singapore as well as EU nations. While Singapore is a preferred location for family offices and digital entrepreneurs because of its strong legal framework and easy access to top-notch financial advisors, the Dubai Golden Visa has gained popularity in some circles because of how simple it is to obtain and the variety of options it offers.
According to the most recent estimates for 2022, India would lose about 8,000 millionaires this year due to net inflows and outflows of US dollar millionaires (the difference between the number of high nets worth individuals who move to and the number who exit from a country).
Since India produces many more new millionaires each year than it loses to migration, these losses are not very concerning. Wealthy individuals have a propensity to return to India, and whenever the nation’s quality of living rises, we anticipate that they will do so in greater numbers.
The UAE is anticipated to attract the largest net influx of HNWIs globally in 2022, according to the Henley Private Wealth Migration Dashboard (at least 4,000). With expected net inflows of 2,800 this year, Singapore is positioned third, after Australia (3,500).
Switzerland is placed first with a score of 2200, followed by the United States with a score of 1500, while Israel is ranked fourth on the list with a score of 2500.
“We are also beginning to get a lot of attention from families from around Asia who want to establish a base in Singapore or the UAE. Nations that are projected to continue to be popular tourist destinations have excellent infrastructure for asset preservation “Nirbhay Handa, group head of business development at Henley & Partners, said.
“For Indians, issues include onerous exchange controls for transporting money overseas, inheritance taxes for assets stored abroad, and restrictive Indian residency laws that target statelessness. Indians are increasingly looking to legal and financial experts for specific advice on addressing these issues through the use of private trusts, holding businesses, unique wills for various countries, and other measures.
Ajinky recommends that people start making their arrangements far in advance before shifting any funds. Others looked to Europe, especially the Mediterranean nations such as Portugal, Malta, and Greece, because they provide a route into the EU, a high standard of living, and, in most cases, a low physical residency requirement—all of which are crucial factors for those who want to keep their families or businesses in India.
Global Scenario
As anticipated, Russia has seen the largest emigration of millionaires over the previous six months. By the end of 2022, net outflows are predicted to reach 15,000, representing a staggering 15% of the country’s HNWI population and 9,500 more than in 2019.
The paper stated that the conflict between Russia and Ukraine is “in turn causing a rapid surge in outgoing HNWIs from Ukraine, which is anticipated to suffer its largest net loss in history – 2,800 millionaires (42 per cent of its HNWI population) and a net loss of 2,400 more than 2019.”
HNWI exits from Hong Kong continue, albeit more slowly; 3,000 net millionaires are anticipated to leave the city by 2022. (a 29 per cent drop compared to 2019). With net withdrawals of 2,500 HNWIs anticipated to up 79% from 2019 — the migration of millionaires from Brazil is accelerating.
Henley and Partners predict that in 2022 there will be a net outflow of 10,000 HNWIs, indicating that China is beginning to suffer from a wealth exodus. As the global economy grows, African, Latin American, and other countries in the Global South are catching up to high-income economies. And as this data shows, over the next ten years, they will witness a higher percentage of millionaires and billionaires.
For instance, the number of HNWIs is expected to rise by 90 per cent in Sri Lanka by 2031, while it will rise by 80 per cent in India and Mauritius and 50 per cent in China, compared to 20 per cent in the USA and 10 per cent in France, Germany, Italy, and the UK.
The United Arab Emirates, on the other hand, has drawn the attention of wealthy investors and is predicted to experience the highest net influx of HNWIs globally in 2022, with 4,000 predicted. This would represent a sharp increase of 208 per cent from the net inflow of 1,300 in 2019 and one of the largest on record for the country.
“The prognosis for 2022 shows a very unstable global climate. 88,000 millionaires are anticipated to have shifted to other nations by the end of the year, 22,000 less than in 2019, when 110,000 did so, according to Juerg Steffen, chief executive of Henley & Partners.
“Next year, the largest millionaire migration flows on record are predicted,” Steffen continued, “as wealthy investors and their families diligently prepare for the new post-COVID world, with an as yet-to-be-revealed rearrangement of the global order and the ever-present threat of climate change as a constant backdrop.
Edited by Prakriti Arora
