Covid accelerates India's millionaire exodus
Rahul left everything and moved to Dubai to take care of his company for harassment by tax officials
India's rich have topped a list of people looking to move abroad through visa programs that offer citizenship or the right to reside in other countries in return for investment.
There was very little that Rahul (name changed) did not have for him when he made the harsh reputation of leaving India six years ago. He is the second generation of a well-heeled family in Delhi. You have a flourishing export business with a monopoly in what is known as a “sunrise sector” - an industry with great future prospects.
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But he left it all behind and moved to Dubai in 2015 to take care of the company's overseas expansion. He also obtained citizenship by investing in one of the Caribbean nations. Harassment from the tax authorities at the Indian enforcement agency was a major cause, he says.
"I could see it was becoming a problem for someone whose businesses were all over the world," he told the BBC. "Having a foreign passport has significantly reduced the bureaucratic burden. I'm less worried about being hit with a random tax claim."
"Tax terror" was a routine complaint among Indian corporate tycoons. When the founder and owner of India's largest coffee chain, Cafe Coffee Day, died in 2019, he accused a former director general of the income tax department of molesting him. But the government has tightened its noose around entrepreneurs in recent years.
The chain owner of Cafe Coffee Day charged a senior tax officer of harassment when he died in 2019
According to a report, tax research by the Indian Income Tax Department has more than tripled in recent years.
The government has argued that this is being done to "eradicate black money - illegal cash hidden from tax authorities - and improve tax compliance. However, critics say the excess is often also due to pressure on bureaucrats." to meet the revenue targets. "
But the tax officer's persecution was only one reason he moved, Rahul says. His decision was also prompted by a growing trend of "division and rule" in India, he told us. He didn't want his children to grow up in India's increasingly polarized environment.
Many others in his circle of wealthy friends also waived their citizenship or residency status, he added.
These claims are borne out by figures from Wall Street investment bank Morgan Stanley. A 2018 bank report found that 23,000 Indian millionaires had left the country since 2014.
According to a report, 23,000 Indian millionaires have left the country since 2014
More recently, a global wealth migration review report found that nearly 5,000 millionaires, or 2% of the total number of high net worth individuals in India, left the country in 2020 alone. And the Indians topped a list compiled by Henley & Partners (H&P), a London-based global citizenship and residency advisor, among those seeking citizenship or residency in others in exchange for money investment Aspire to countries.
Covid-19 was a major driver of the ongoing trend among affluent Indians to "globalize their lives and wealth," according to H&P. So much so that the company opened its office in India in the middle of the lockdown last year to meet growing demand.
"I think they [customers] are realizing they don't want to wait for the second or third wave of the pandemic. They want their papers now that they are at home. We call this an insurance policy or Plan B," Dominic Volek said , Group Head of Private at Henley & Partners, the BBC in a video call from Dubai.
According to Volek, the pandemic could be a game changer because it makes the rich think more holistically about migration. It's no longer just about visa-free travel or easy access to global markets, but about diversifying wealth, better health care and education to protect yourself from the uncertainties created by the pandemic.
Countries like Portugal, which has a "Golden Visa" program, and countries like Malta and Cyprus are preferred destinations for India's well-heeled people, according to H&P.
According to a recent report, nearly 5,000 millionaires in India left the country in 2020 alone
This exodus of big money is not necessarily permanent - people are simply investing money in another country as a substitute option rather than taking all of their money out of their home country and cutting business ties. But it is not a good sign for a developing country like India, experts say.
"When this happens, they are removing themselves, their entrepreneurial skills, and their incomes and assets from the tax base. This is likely to have long-term detrimental effects. Your exit sends out a bad signal for the 'business climate' in India." says Rupa Subramanya, Distinguished Fellow at the Asia Pacific Foundation of Canada.
Andrew Amoils, director of research at New World Wealth, a Johannesburg-based wealth intelligence group, told Business Standard, "It can be a sign of bad things as high net worth individuals are often the first to leave the company." - You have the means to go unlike middle-class citizens. "
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