April 21, 2021
For the 2nd year running, Indians have topped the list of people seeking to relocate abroad through programs that offer Citizenship or Residency in foreign countries in return for monetary investments in that country.
To put this in perspective, a 2018 Morgan Stanley Report found that over 23,000 Indian millionaires had left the country since 2014. More recently, a “Global Wealth Migration Review Report” found that nearly 5000 millionaires or 2% of the total number of high net-worth individuals in India left the country in 2020 alone. And the pandemic has accelerated this trend. We are finding clients increasingly saying that they do not want to wait for the 2nd or 3rd wave of the pandemic.
Such has been the increase in this trend that leading investment migration law firms are setting up offices in India even during the pandemic.
The reasons for such a trend are varied and inputs from our clients suggest the following are the more prominent ones :
- Increasing polarization within society as a whole
- An increasingly intrusive government approach towards business
- An over-compliant business environment i.e. businessmen now are showing an increasing distress towards the high number of compliances that they have to constantly adhere to
- Harassment by the tax authorities
- A very uncertain COVID environment, which seems to be getting worse by the day
- High taxes
- A fear that the rich will be taxed even more once the pandemic subsides
- Less new investments in industrial sectors means less opportunities and lower salaries amongst the highly skilled individuals
As the last point above suggests, the exodus is also happening in the highly skilled and upper echelons of very successful professionals, who again have the resources and ability to look for better opportunities abroad.
Wealth protection, wealth diversification, better healthcare and better education for children are upper-most on people’s minds right now. People are now looking for an environment that offers more certainty of opportunities both for themselves and their families. This is not to say that everyone is breaking all ties with India, moving out all of their money and cutting ties for good. Many are merely looking to invest in other countries as a fall-back option (a PLAN B).
And what are the options for the wealthy looking at foreign jurisdictions. The options are many (both for Residency and Citizenship programs), from the Americas to Europe to Oceania to the Middle East and to even some countries in South-East Asia. There are options in every corner of the globe, depending on your goals and preferences.
But for a developing country, mass migration of the wealthy and highly skilled & successful professionals cannot possibly be good for India in the long run. This is bound to have a long-term detrimental effect. A serious attempt must be made to arrest this trend at the earliest.