Explained: Why are 6,500 super-rich expected to leave India in 2023?

Around 6,500 of the super-rich are expected to leave India in 2023. The estimate comes courtesy of the Henley Private Wealth Migration Report 2023. The report from Henley and Partners, the international residence and citizenship advisory firm, puts the number of high net-worth individuals (HNIs) – those with an investable fortune of over $1 million (Rs 8.2 crore) – leaving at the second-highest around the world. This would represent a decrease from the 7,500 HNIs who left the country last year. But why are so many of the super-rich heading abroad? And where are they going? Let’s take a closer look: Why is this happening?

 Experts say the big reasons are taxes and complex remittance rules.

Indian Express quoted Sunita Singh-Dalal, Partner, Private Wealth & Family Offices at Hourani, as saying that “prohibitive tax legislation coupled with convoluted, complex rules relating to outbound remittances that are open to misinterpretation and abuse, are but a few issues that have triggered the trend of investment migration from India”. Dominic Volek, the company’s group head of private clients, told Business Standard several other factors from safety, security, climate change and even governments that look favourably on crypto also come into play.  Henley and Partners CEO Juerg Steffen told Forbes millionaires leaving are often a warning sign to authorities. “Affluent families are extremely mobile, and their transnational movements can provide an early warning signal in terms of a country’s economic outlook and future country trends,” he added. How does India compare with others? As per Indian Express, China is expected to lose 13,500 HNIs. Andrew Amoils, head of research at New World Wealth told Business Standard “General wealth growth in China has been slowing over the past few years, which means that the recent outflows could be more damaging than usual. China’s economy grew strongly from 2000 to 2017, but wealth and millionaire growth in the country has been negligible since then (when measured in US-dollar terms).” [caption id=“attachment_12694382” align=“alignnone” width=“640”] China’s refusal to accept a meeting with the US at the 2023 event in Singapore is China is expected to lose 13,500 HNIs. ANI[/caption] Meanwhile, the UK is expected to lose 3,200 HNIs and Russia is expected to see 3,000 HNIs depart. As per Forbes, high capital gains tax and estate duty rates – which are among the highest in the world – and the decreased importance of the London Stock Exchange are some factors behind the exodus from the UK. Where are they going? Experts say spots such as Dubai and Singapore sit atop the list of destinations for Indians. According to Business Standard, Dubai’s ‘golden visa programme’, its tax laws and business system make it a perennial favourite among India’s wealthy.

Portugal until recently was a popular spot with Indian HNIs, as per Forbes.

“But perhaps that has reached its maximum potential, considering the announcement regarding the termination of the Portugal Golden Residence Permit Program, which had attracted significant investment in Portuguese real estate and other ventures,” Dalal told the outlet. Which countries will benefit most? As per NDTV, Australia will see the highest influx of HNIs from around the world in 2023 at 5,200. The UAE, meanwhile, is predicted to witness an influx of 4,500 super-rich. Singapore is likely to see 3,200 HNI come in, while the US will likely add 2,100 HNIs to its rolls. The report noted America’s fall in popularity with HNIs compared to the years prior to COVID-19 – perhaps because of the looming threat of higher taxes.

Switzerland, Canada, Greece, France, Portugal, and New Zealand round out the list of countries that will most benefit.

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Forbes quoted the report as stating, “Singapore, Switzerland, and the UAE have all built their reputations on the premise of being safe havens not only for living but also for preserving wealth. They have also established themselves as highly attractive business hubs where companies can thrive in fiscally advantageous jurisdictions with favourable corporate tax rates as well as zero wealth and inheritance taxes.” Volek told Business Today countries who see an influx of HNIs almost always seem to have programmes that allows citizenship through foreign direct investment (FDI). “Nine of the top 10 countries for forecast net HNI inflows in 2023 host formal residence by investment programs that encourage foreign direct investment in return for the right to reside, which can also lead to citizenship in some cases. Investors see the clear value of diversifying their domicile portfolios as the ultimate hedge against both regional and global volatility, now and in the future," Volek said. Should we be concerned? No, say experts. Indian Express quoted Andrew Amoils, Head of Research at New World Wealth, as saying,  “These outflows are not particularly concerning as India produces far more new millionaires than it loses to migration.” Meanwhile, Rohit Bhardwaj, director, private clients, Henley & Partners India, told the Business Standard around 357,000 HNIs remain in India. Bharadwaj added that India showcases a ‘robust wealth presence’. With inputs from agencies Read all the  Latest News ,  Trending News ,  Cricket News ,  Bollywood News , India News  and  Entertainment News  here. Follow us on  Facebook,  Twitter and  Instagram.