Surendra Hiranandani, the real estate tycoon and co-founder of Hiranandani Group recently gave up his Indian passport and took citizenship of Cyprus, an Eastern Mediterranean island country.
No, this is not an isolated incident. According to Ruchir Sharma, head of emerging markets and chief global strategist at Morgan Stanley Investment Management, since 2014 about 23,000 millionaires have left India. The number is around 7,000 for the year 2017.
The question remains why are the millionaires leaving their own country to settle somewhere else? The first thing that comes to mind is because of the tax benefits. But you will be surprised to know that it’s not the reason at all. Hiranandani quoted that as a businessman the primary reason for him is facing difficulty in getting a work visa on an Indian passport. He stated:
“The primary reason is difficulty in getting work visas on Indian passport. I have absolutely no issues with tax rates and other such things. My son Harsh continues to be an Indian citizen and he looks after our company’s interests in India.”
The real estate mogul further added:
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“If I had a chance to speak with Prime Minister Narendra Modi today, I would urge him to do something about improving the ease of getting various permissions for the real estate sector. Then, of course, there is the major problem of the rate of interest the builders are charged,”
According to World Bank, India ranks at 181st among 189 countries in terms of doing business with ease for the construction industry. This certainly raised an alarm compelling Central Board of Direct Taxes (CBDT) to form a five-member committee to see the effect of this migration trend on Indian economy. In an internal memo they stated:
“In recent times, there has been a trend of high net worth individuals migrating to other countries. Such migration is a substantial tax risk since they may treat themselves as non-residents for taxation purposes even though they may have strong personal and economic ties with India.”
Coming back to the question of why this immigration trend is blooming, young Indians are trying to tap the international market to fulfill their entrepreneurial dream and a foreign citizenship is providing lucrative options for growth other than the home country. Most of them are using the EB-5 Investor Visa route to get a visa and eventually a Green Card.
In order to get EB- 5, presently an Indian is required to invest $500,000 (Rs 3.2 Cr). This should be done for self, spouse, and any number of children. Furthermore, there is no minimum education or income requirements. However, they need to prove that the investment amount is legitimately earned. It can be from business, profession, inheritance, gift or even a loan against collateral.
Other than the ease of doing business, many are leaving due to the striking difference between the lifestyles of India and other countries. Some countries are preferred more due to their investment options, lifestyle, and other benefits. The most preferred ones are USA, UK, Canada, Portugal, Germany, and Cyprus.
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