Why Are Ultra Rich Individuals Leaving India? An Insightful Examination

India is a country known for its rich cultural heritage and booming economy. India has seen a significant rise in the number of High Net Worth Individuals (HNIs) or simply ultra-rich. However, a recent trend has caught the attention of economists and social scientists alike. A growing number of these HNIs are leaving the country. This article delves into the reasons behind this trend, its implications, and the perspectives on whether they should stay or go.

Table of Contents

Who are HNIs?

HNIs are individuals with substantial financial assets, typically with a net worth of over $1 million or INR 8.2 crores. The population of HNIs in India has been on the rise, with a growth of 10.5% in 2021, bringing the total to 308 individuals. Despite this growth, a report by Henley and Partners predicts that around 6,500 HNIs will leave India in 2023.

Why are HNIs Leaving India?

The reasons behind this trend are multifaceted, ranging from economic to personal factors. Here are some key reasons:

Taxation and Complex Remittance Rules: India’s tax legislation and complex rules relating to outbound remittances are often cited as significant factors. These rules are open to misinterpretation and can be a deterrent for HNIs. For instance, introducing the ‘super-rich’ tax in the 2019 budget, which imposed higher tax rates on those earning above Rs 2 crore and Rs 5 crore, has been a point of contention for many HNIs.
Safety, Security, and Climate Change: HNIs are increasingly concerned about their safety and the impacts of climate change. Countries with better safety records and proactive climate change policies are attractive alternatives. For example, the increasing air pollution levels in major Indian cities have been a cause of concern for many HNIs, leading them to consider migration.
Crypto-friendly Governments: With the rise of digital assets like cryptocurrencies, HNIs are attracted to countries with crypto-friendly regulations. For instance, the Indian government’s fluctuating stance on cryptocurrencies has led many HNIs to consider countries like Singapore, which has clear and supportive rules for cryptocurrencies.

Where are HNIs Going?

Popular destinations for Indian HNIs include Dubai and Singapore, known for their favorable tax laws, business systems, and quality of life. Australia, the UAE, and the US are also expected to see a significant influx of HNIs in 2023[^2^].

Should HNIs Leave India?

The decision to leave one’s home country is deeply personal and depends on individual circumstances. However, here are two perspectives to consider:

Why HNIs Should Stay in India

Emerging Opportunities: India is a rapidly developing economy with a burgeoning startup ecosystem. Staying in India allows HNIs to capitalize on these opportunities and contribute to the country’s growth. For instance, the rise of unicorns like Zomato and Paytm presents exciting investment opportunities for HNIs.
Cultural and Family Ties: India’s rich cultural heritage and close-knit family structures can be compelling reasons for HNIs to stay. The emotional connection to one’s homeland and the desire to give back to the community are strong incentives for many HNIs to remain in India.

Why HNIs Might Choose to Leave India

Better Quality of Life: Countries like Singapore and Dubai offer a high standard of living, world-class infrastructure, and a safe environment, which can be appealing to HNIs. For example, Singapore’s high-quality education system and healthcare facilities are often cited as reasons for migration by HNIs with families.

Favorable Business Environment: These countries also offer a more favorable business environment, with simpler regulations and lower taxes. For instance, the UAE’s tax-free regime and ease of doing business are attractive to HNIs looking to expand their business operations.

Conclusion

While the migration of HNIs from India is a trend worth noting, it’s important to remember that India continues to produce more new millionaires than it loses. The departure of some HNIs can also lead to increased foreign investment in India, as these individuals maintain business and personal ties with their home country.

FAQs

According to a report by Henley & Partners, about 8,000 HNIs are expected to leave India in 2023

An individual with a net worth of over $1 million or INR 8.2 crores is typically considered an HNI, or “rich”, in India.

The ultra-rich are leaving India due to a combination of factors, including taxation and complex remittance rules, concerns about safety and climate change, and the appeal of crypto-friendly governments

References