India is likely to see a decrease in the outflow of high-net-worth individuals (HNWIs) in 2023, as reported by the Henley Private Wealth Migration Report 2023. This decline comes after last year’s outflow of 7,500 millionaires, with the projected outflow for 2023 being around 6,500 individuals. While the numbers indicate a decrease, India still ranks as the second-largest country globally in terms of HNWI outflow, following China’s net loss of 13,500 millionaires.
The report highlights various reasons why millionaires are leaving India. Recent and persistent turmoil has caused a shift in mindset among investors, leading them to consider relocating their families for a range of factors. These include concerns related to safety, security, education, healthcare, climate change resilience, and even the crypto-friendliness of other countries. Dominic Volek, Group Head of Private Clients at Henley & Partners, emphasized the importance of diversifying domicile portfolios as a hedge against regional and global volatility.
Apart from the aforementioned reasons, India’s prohibitive tax legislation and convoluted rules regarding outbound remittances have also contributed to the trend of investment migration from the country. As per the report, wealthy Indian families prefer destinations such as Dubai and Singapore. Dubai, often referred to as the “5th City of India,” is particularly attractive due to its government-administered global investor “Golden Visa” program, favorable tax environment, robust business ecosystem, and safe and peaceful environment.
However, despite the outflows, the situation is not a major cause for concern in India. New World Wealth projects an 80% increase in the high-net-worth individual population by 2031, positioning India as one of the world’s fastest-growing wealth markets. This growth is expected to be fueled by the thriving financial services, healthcare, and technology sectors within the country. Interestingly, the firm has observed a notable trend of affluent individuals returning to India, indicating an anticipated influx of wealthy individuals in the future.
Rohit Bhardwaj, Director – Private Clients at Henley & Partners India, highlighted the robust wealth presence in India, with approximately 357,000 high-net-worth individuals currently residing in the country. The report also mentions that South Asia has shown significant interest in investment migration programs, with a record number of enquiries received in the first four months of 2023, accounting for 72.2% of the total number of enquiries recorded the previous year.
In terms of global trends, Portugal’s Golden Residence Permit Program has been the most popular investment migration pathway in 2023, followed by Austria’s citizenship by investment offering and St. Kitts and Nevis’s Citizenship by Investment Program. Australia is expected to attract the highest net inflow of HNWIs in 2023, with 5,200 millionaires projected to relocate there. The United Arab Emirates, Singapore, the United States, Switzerland, and Canada also make it to the list of preferred destinations for high-net-worth individuals.
China continues to experience the largest outflow of millionaires each year due to migration. Andrew Amoils, Head of Research at New World Wealth, pointed out that the general wealth growth in China has been slowing, resulting in more damaging outflows in recent years. The UK is expected to witness a net outflow of 3,200 HNWIs in 2023, primarily influenced by the impact of Brexit. Similarly, the appeal of the United States among migrating millionaires has dwindled, potentially due to higher taxes and other factors.
To attract high-net-worth individuals, political stability, low taxation regimes, and personal freedom are considered key metrics. Countries offering these benefits are more likely to attract wealthy individuals looking for alternative residences and additional citizenships. It is essential for nations to create an environment that fosters stability and provides attractive investment opportunities.
In conclusion, India is expected to witness a decrease in the outflow of high-net-worth individuals in 2023 compared to the previous year. While challenges such as tax legislation and complex rules exist, India’s capacity to generate new millionaires remains strong, positioning it as one of the world’s fastest-growing wealth markets. By addressing the concerns that lead to investment migration and providing favorable conditions, India has the potential to retain and attract wealthy individuals in the future.
Source of this News: Business Standard
Welcome to Startup Insider, your go-to source for the latest Startup Stories, Funding Updates, and Informative News and Updates. Stay up to date with the ever-changing business landscape and gain insights to help you succeed.
