Rich people have fled overseas, india's "talent return" has not worked well?

India's infrastructure construction such as transportation, electricity and water supply is relatively lagging behind, which is also one of the important reasons for the exodus of the rich. Pictured here is the opening of clean water supply facilities in the village of Bhopalgola in Madhya Pradesh, India, on June 22, 2022. (Xinhua News Agency/Photo)

"About 8,000 Indian high net worth individuals (HNWIs) will leave India in 2022." On 13 June 2022, a British immigration firm called Henley & Partners made predictions in its report, The Global Wealth Migration Survey.

High net worth individuals are millionaires with personal net worth of more than $1 million. The statistic also shows that in 2020 alone, about 5,000 millionaires left the country, accounting for about 2% of all high-net-worth individuals in India.

The third wave of Indian immigration

"The flight of India's rich people overseas is the third wave of Indian immigration." Bob Dhillon, an Indian real estate tycoon and CEO of Mainstreet Equity, lamented.

The first wave of migration occurred in the early 20th century, dominated by the migration of poor farmers from India's Punjab province to Western countries. The second wave was (in the 1990s) when technologists left India in search of better working and living conditions.

Rahul is part of the "third wave of wealthy immigrants." Born into a wealthy family in Delhi, India, his father ran an export trading company that had a monopoly position in the industry.

As an adult, Rahul inherited his father's business. In order to expand overseas markets, in 2015, Rahul moved to Dubai, United Arab Emirates, amid opposition from his family. He has since acquired citizenship of a country in the Caribbean through investment immigration.

"In recent years, Indian entrepreneurs who have emigrated overseas have been elite talents in their industries, aged between 40 and 60." Henry and his partner's personal immigration consultant Dominic Volek told Southern Weekend that Indian millionaires who come to consult on investment immigration by 2021 are up 54% year-on-year.

Countries such as Portugal, the United Arab Emirates, Singapore and Australia are the most popular immigrant countries among India's rich, Warleck said. Among them, Portugal's "Golden Visa" is the easiest to obtain.

Applicants only need to invest in a property of €280,000 in Portugal and stay in Portugal for an average of 7 days per year to obtain a "Golden Visa" for up to 5 years, allowing visa-free entry to 26 EU member states. After the expiry of the 5-year period, it is possible to apply for Portuguese citizenship.

Many of Rahul's wealthy friends also renounced their Indian citizenship. According to India's Ministry of Foreign Affairs, more than 600,000 Indians have renounced their Indian citizenship in the past five years, of which 40% have emigrated to the United States.

"The main reason I left India was to avoid harassment by Indian tax officials." Rahul told the BBC that large Indian entrepreneurs like Rahul are always faced with high Indian taxes, "When I have overseas citizenship, I no longer have to face cumbersome tax issues." ”

Under India's current tax laws, Indian citizens with an annual income of more than Rs 1.5 million and non-resident Indian residents (NGIs) who have resided for more than 120 days a year are subject to 30% personal income tax.

For India's rich, taxation is a form of "tax terrorism." Facing huge financial pressures, VG Siddhartha, founder of Indian coffee chain Café Coffee Day, committed suicide in 2019, India India Reported.

Siddhartha once claimed in a note that he had been repeatedly harassed by Indian tax officials.

Tax avoidance, risk avoidance, and evasion

The culture of tax evasion and avoidance by India's rich is also deeply rooted.

"Let me repeat, in 2012, there were only 42,800 (India's richest people pay taxes)!" In February 2013, when India's finance minister, Paranyaphan Chidanbaram, named the number of rich Indians who actually paid taxes in a parliamentary tax proposal, there was an uproar.

According to Credit Suisse, there were 158,000 millionaires in India in 2012.

In the past, India's rich often transferred capital to a third country and then "transferred" it back to India in the form of legal investment, thus laundering a large amount of taxable capital and thus achieving tax avoidance. According to the Associated Press, more than 40 percent of India's foreign direct investment (FDI) came from the Indian Ocean island nation of Mauritius in 2012.

Prior to 2016, Mauritius and India had a "capital gains tax exemption" in their tax treaties, which became a "money laundering path" for India's wealthy.

The World Bank estimates that India's "underground economy" accounts for about one-fifth of the country's gross domestic product (GDP). In november 2016, the Modi government issued a "money scrap order" to ban banknotes with a face value of Rs 500 and Rs 1,000 for a short period of time in an effort to combat the underground economy dominated by cash transactions of the rich.

In recent years, in order to avoid taxes and seek a better business environment, India's rich have begun to go overseas and set up companies.

"A rich man going to sea is like a company's coming-of-age gift." An EXECUTIVE at CII, an Indian industrial group who spoke on condition of anonymity, publicly admitted that once the company's business reaches a certain size, entrepreneurs will always set off on their own or send people to the local area to study in detail the laws, culture, business models and consumer habits of foreign markets.

For example, India's large e-commerce company Flipkart and Indian mobile advertising network InMobi are both registered companies in Singapore, because Singapore's corporate tax rate is 17%, which is only half that of local Indian companies.

High-value passports and lax laws are also key to Indian entrepreneur immigration, which facilitates the rich to open up markets and arrange funds. Preliminary statistics from Southern Weekend reporters found that Indian passports can only travel to 59 countries without visas, while citizens with Portuguese and Maltese citizenship can travel to 186 and 185 countries respectively.

From the perspective of inheritance, in India, Muslim men are required to leave one-third of their personal property to the designated heirs, and the remaining two-thirds will be divided equally among multiple heirs according to law. Tax havens such as the British Virgin Islands (BVI) could help India's wealthy bypass inheritance and testamentary laws. The island's law stipulates that the rich can transfer the wealth stored on the island to anyone they like.

The COVID-19 pandemic has spurred India's wealthy "to globalize assets and lives". On 24 April 2021, india's COVID-19 pandemic raged, and at least eight private jets carrying India's billionaires landed in London before the United Kingdom announced entry restrictions on India. The British "Times" speculated that there may be people with confirmed COVID-19 on the plane.

Two days later, Mukesh ambani, the richest man in India and Asia and chairman of Reliance Industries, spent £57 million to buy Stoke Park in Britain.

There are also a small number of Indian billionaires who have fled India to avoid legal sanctions. Vijay Mallya, a business magnate in The Indian airlines and liquor industry, wears a cutting-edge haircut that is short and long, and his life is pompous and extravagant. In 2012, Marya's Kingfisher Airlines went bankrupt, leaving large debts and long-standing arrears of wages to its employees.

In early 2016, the Indian government indicted Marya for lawbreaking such as Kingfisher Airlines, and Marya refused to pay off her debts and quietly boarded a plane bound for Britain.

Indians are more likely to succeed overseas

Aneesh Sinha, 46, is a senior financial person who has lived in both India and Canada before choosing to immigrate to Canada.

"Even though I don't earn as much as an Indian bank executive in Canada, I still enjoy this work-life balance." Anish has said publicly that nowadays, instead of living as stressfully and mechanically as he did in India, he has time every afternoon to pick up his children from school and enjoy more family time.

"For rich and middle-class families in India, investment immigration can provide a better education for their children and change the way families live." Henry and his partner's personal immigration consultant Dominic Wareck told Southern Weekend that this has become a way for Indian families to integrate into globalization.

India is the world's largest exporter of migrants. According to the Highlights of International Migration 2020 released by the United Nations Department of Economic and Social Affairs (UN DESA), at least 18 million Indian expatriates were living overseas as of December 2020.

The Indian expatriate who went overseas broke the caste shackles of Indian society, received a higher education, and lived in a more inclusive social environment, which made it easier for Indians to achieve career success.

Around 2019, when Jay Chaudhry, founder of Zscaler, an American cybersecurity company, was featured on the List of Forbes Billionaires in the United States, his story became a model of Indian-American entrepreneurial success.

Public information shows that in 1958, Chowdhury was born in a rural village in the Indian state of Himachal Pradesh. His parents worked as farmers and his family was poor. As a teenager, there was no water or electricity in his village.

Education became Chowdhury's springboard to success. Chowdhury was accepted by the Indian Institute of Technology (IIT), becoming the first university student in the village to attend the School of Engineering. Chowdhury later earned three master's degrees in computer engineering, industrial engineering, and business administration from the University of Cincinnati.

After college, Chowdhury founded Zscaler, a cloud ecosystem that disrupts the cybersecurity market. In 2022, Forbes magazine announced that Chaudhry's personal net worth was $9.7 billion.

"Indians who come to the United States are carefully selected." American economist Nirvikar Singh said.

He also paints a portrait of the Indian-American community in his book The Other One Percent: Indians in America:

More than 70 percent of Indian Americans have a college degree; They are concentrated in the information technology and internet industries, with 8 percent of U.S. tech startup founders and a third of Silicon Valley tech startups being Indian-American; The average Indian-American income is higher than the average income associated with their level of education.

"Migration of the rich is a barometer of a country's economic health"

The New World Wealth Report conservatively estimates that between 2007 and 2017, about 38,000 Indian millionaires left India to live or work overseas. If each person takes only $1 million of its wealth, the Indian government will lose a minimum of $38 billion in capital.

A few years ago, billionaire Vivek Sehgal, born in Delhi, India, moved his family to Australia. Because it is more convenient to manage and operate Samar Motors Group as an Australian citizen.

Of the four london-based Brothers of India's Sinduja Group, Srichand Hinduja and Gopichand Hinduja are outstanding British citizens, prakash Hinduja has been a Swiss citizen since 2000.

The exodus of the rich and capital is not good for the Indian economy. After the impact of the COVID-19 pandemic, the public debt of the Indian government has risen sharply. According to the 2020/2021 fiscal year, the Government of India's fiscal deficit ratio has increased from 3.3% to 9.5% as planned, while the government's public debt as a share of GDP has increased to nearly 90%.

India has long been in the predicament of "high-end talent outflow". Historian Vaagay Prasad statistically found that between 1966 and 1977, about 20,000 scientists, 40,000 engineers and 25,000 doctors left India for the United States, most of whom spoke English and came from high-caste groups.

Abhijit Banerjee, winner of the 2019 Nobel Prize in Economics, was already Indian-American at the time of the award. Previously, three other Nobel laureates in science, also Indian, have now acquired U.S. citizenship.

Talent migration has taken away a large number of Indian elites. According to India's Ministry of Human Resources, more than two-thirds of Indian Polytechnic graduates go to the United States every year to study and work, which is called India's "fatal wound to democratic development".

Of the more than two thousand startups in Silicon Valley, 40 percent are founded by Indians, and the vast majority of them graduate from the Indian Institute of Technology.

The success of Indian-Americans reflects india's lack of education and economic development at home, and therefore cannot resist the "siphon" of human capital in other countries.

The acquisition of permanent residency or citizenship by India's rich has increased the value of personal wealth, but it has further exacerbated the solidification of Indian social classes. In the World Inequality Report 2022, India is defined as a "poor and unequal country" with the top 1 percent of income earners accounting for 22 percent of national income.

"Migration of the rich is a barometer of a country's economic health." Andrew Amoils, head of research at New World Wealth, a British consultancy, believes that countries that attract wealthy inflows tend to have better policing, more competitive tax rates and more attractive business plans.

"Talent return"?

For decades, the Indian government has introduced a number of "talent return" policies. In the 1980s, the Indian government promulgated a computer software policy, set up a government fund to invest in the construction of a science city, implemented the "software rejuvenation" strategy, and launched the "Million Software Talents Project".

In 1991, Bangalore, India, became the first software technology park to be built, followed by the completion of 8 software technology parks in Pune and Hyderabad.

The Indian government has given expatriates a relaxed "mutual recognition of identity scheme". In 1999, India introduced the "Indian Origin Card" (PIO) scheme, in which any person holding an Indian passport, as well as their parents or grandparents, can apply for an "Indian Origin Card", and cardholders do not need a visa to visit India for 15 years.

In order to facilitate the protection of property and identification of expatriates, the Indian government has successively launched the "Indian Origin Card" (PIO) program and the "Indian Overseas Citizenship" (OCI) program, which gives successful overseas people who return to China to invest in entrepreneurship more preferential treatment than the US green card.

In 2003, India set up an annual "Overseas Indian Day" to attract more lost talents to contribute to India's construction. That year, the Indian Parliament also passed the Amendment to the Nationality Act, formally recognizing "dual citizenship" on an equal footing, with the target countries of 16 Western economic powers, including the United States, the United Kingdom, Australia, Finland and Italy.

They have always been a major concentration of overseas Indian senior talent. In recent years, there has also been a small "reverse brain flow" in India, with some programmers who once worked at Google starting to flow back to Bangalore.

The return of some Indian-American tech talent to India has helped to further activate India's market vitality, so much so that Google CEO Sundar Pichai has promised to establish a "digital fund" in India and invest $10 billion in 5 to 7 years to promote digital construction in India.

However, India still faces a large number of high-end talent gaps. In February 2022, a joint report by the Indian Software Services Association and international consultancy Zinnov said that India will still lack about 2 million scientific and technological talents in the next five years.

Southern Weekend reporter Gu Yuebing Southern Weekend intern Cheng Cheng