6,500 millionaires expected to leave India this year. Why are the super-rich emigrating abroad?

The recently released Henley Private Wealth Migration Report (2023) reveals that India is expected to witness a net outflow of 6,500 high-net-worth individuals (HNWIs) in 2023. In 2022, India saw 7,500 HNWIs leaving the country. This report positions India as the second-worst performer in terms of losing HNWIs, following China with 7,500 such individuals.

High-net-worth individuals

• HNWI is an industry designation implying individuals with an investable wealth(liquid financial assets) of at least US$1 million, equivalent to approximately Rs 8.2 crore.
• Investable wealth is funds or monetary investments that can be readily transformed into cash, excluding primary residence, exquisite artwork and antique collectables.

Global trends

• According to the report, the top five destinations for net inflows of HNWIs in 2023 are expected to be Australia, the United Arab Emirates (UAE), Singapore, the United States, and Switzerland.
• On the other hand, the largest net outflows of HNWIs are expected from China, India, the United Kingdom (UK), Russia, and Brazil.

• These predictions are based on data provided by New World Wealth, the agency that provides the data for the report.

Insights for India

• Despite the projected huge outflow, India remains among the top ten richest countries globally, ranked 10th, in the W-10 grouping(World's wealthiest countries).

• Out of 1.428 billion, India is home to 3,44,600 HNWIs, 1,078 centi-millionaires (individuals with wealth exceeding $100 million), and 123 billionaires (individuals with wealth exceeding $1 billion or Rs 8,200 crore).

Why are rich Indians migrating out?

• According to Juerg Steffen, CEO of Henley & Partners, rich families are highly mobile, and their movements can serve as an indicator of a country's economic outlook and where it's headed.
• Among countries with high inflow, the UAE and Singapore have an easy visa and stay policies for Indians.
• With the government-backed Golden Visa, UAE serves as 'the fifth city for India'. A prolonged stay and favourable tax structures are lucrative enough for the rich to leave India.

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•  These countries act as launchpads for them as it is, then, comparatively easier for them to apply for residency or citizenship in a first-world country.
• These individuals are sensitive to potential threats to their wealth and often take corrective action by relocating when circumstances deteriorate. Hence, Switzerland, the UAE and Singapore are right up there as safe havens for wealth security.  Mind you, many of these countries are also important centres of global commerce.
•  Political stability, low taxation, and personal freedom had traditionally been key factors in their decision-making, which recently is shifting towards intangible elements that impact their children's prospects, quality of life, and the legacies they leave behind.
• Juerg Steffen says that the outflow often shows a drop in confidence in the country.

This explains why a significant amount of private wealth is flowing into countries that offer a robust regulatory environment, respect for the rule of law, and guaranteed economic freedom (dodgy to some extent).