India's Ultra Rich Leaving Country - Huge Setback to Our Economy?

A significant number of India’s ultra-high-net-worth individuals (UHNWIs) are considering relocating abroad, according to a recent survey by Kotak Private in collaboration with consultancy firm EY. The study, which surveyed 150 of India’s wealthiest individuals, found that at least 22% of them are contemplating migration, citing factors such as better living standards, improved business environments, and superior education and healthcare facilities abroad.

India’s Growing Wealth Base and Migration Trends

As of 2023, India had approximately 2.83 lakh UHNWIs, each with a net worth exceeding ₹25 crore. Their collective wealth was estimated at ₹2.83 lakh crore. This number is expected to rise to 4.3 lakh individuals by 2028, with a combined wealth of ₹359 lakh crore.

Despite the rising wealth, many of India’s richest individuals are seeking opportunities abroad. However, Kotak Mahindra Bank’s president, Gautami Gavankar, reassured that the migration of the wealthy does not necessarily imply capital flight, as regulatory caps prevent the free outflow of money even if residency changes.

Slowdown in Wealth Exodus: A Positive Sign?

A report by Henley & Partners suggests that the trend of millionaire migration from India is showing signs of slowing. While an estimated 4,300 high-net-worth individuals (HNWIs) are projected to leave India in 2024, this is a decline from 5,100 in 2023 and a sharp drop from 7,500 in 2022.

This decline in wealthy individuals migrating could indicate an improvement in the country’s economic and social conditions. Experts suggest that fewer people leaving the country could be a sign of stabilizing factors that previously drove migration.

Why Are India’s Rich Leaving?

Traditionally, tax benefits, economic opportunities, and political stability have been key motivators for migrating millionaires. However, the Henley & Partners 2024 report highlights evolving priorities:

• Higher Quality of Life: Better healthcare, infrastructure, and standard of living.
• Education: Access to world-class education for children.
• Climate Resilience: Countries with better environmental policies and sustainability measures are becoming attractive.
• Wealth Protection: Many UHNWIs seek jurisdictions with strong financial protection laws to secure their fortunes for future generations.
• Business-Friendly Environments: Over two-thirds of surveyed individuals pointed to smoother business operations as a key reason for migration.

The survey also found that professionals were more inclined to migrate than business owners or inheritors. Age-wise, UHNWIs in the 36-40 and 61+ age groups showed a higher interest in leaving India.

Top Destinations for Indian Millionaires

Like their global counterparts, Indian millionaires are increasingly choosing the United Arab Emirates (UAE) as their preferred destination. With its zero income tax policy and a 5% value-added tax (VAT), the UAE is projected to attract 6,700 HNWIs in 2024. Other popular choices include Australia, Singapore, the United States, and Switzerland, all offering political stability, favorable tax policies, world-class education systems, and high living standards.

Global Wealth Migration Trends

India ranks as the third-highest country in millionaire migration, trailing China and the United Kingdom.

• China is projected to witness an all-time high outflow of 15,200 HNWIs in 2024 due to slowing economic growth and regulatory challenges. Popular destinations include Singapore, the USA, Canada, and Japan.
• The UK is expected to see 9,500 millionaires leave in 2024, with London being particularly affected. Many are relocating to Paris, Dubai, Amsterdam, Monaco, Geneva, Sydney, and Singapore, as well as retirement-friendly locations like Florida, the Algarve, Malta, and the Italian Riviera.

Despite these trends, the Henley & Partners report reassures that India is not in a crisis. The country continues to produce far more new HNWIs than it loses, and many of those who migrate still maintain business interests and second homes in India.

Other countries experiencing large millionaire outflows include South Korea, Russia, Brazil, South Africa, Taiwan, Nigeria, and Vietnam. Meanwhile, the top 10 countries attracting millionaires in 2024 are projected to be the UAE, the USA, Singapore, Canada, Australia, Italy, Switzerland, Greece, Portugal, and Japan.

Conclusion

While India continues to see a steady migration of its wealthy individuals, the slowing trend suggests a potential stabilization in the factors that previously fueled the exodus. With strong economic growth, improving infrastructure, and rising global influence, India still remains a wealth powerhouse despite the outflows.