India to Lose 6,500 Millionaires in 2023 Due to Tax Terrorism, Complex Compliance & More In terms of HNWI (high-networth individuals) outflows globally, India is now the second-largest country after China (a net loss of 13,500).

According to the Henley Private Wealth Migration Report, 2023, which tracks wealth and investment migration trends globally, India is anticipated to experience an outflow of at least 6,500 high-net-worth individuals in 2023, which is slightly less than the 7,500 figure from the previous year.

High-net-worth individuals (HNWIs), also known as 'millionaires', are those having investable wealth of $1 million or more.

India now ranks second globally in the number of HNWIs leaving the country, after China (net loss of 13,500).

The UK (3,200) and Russia (3,000 vs 8,500 in 2022 due to their invasion of Ukraine) are ranked third and fourth, respectively, in the report.

What drives millionaires to move?

The research listed some of the problems that have contributed to the trend of investment migration out of India as being the country's prohibitive tax legislation combined with convoluted, complex procedures relating to outbound remittances open to misinterpretation and abuse.

For wealthy Indian families, Dubai and Singapore continue to be top travel destinations. The former is said to be especially alluring due to its government-administered "Golden Visa" programme for international investors, a friendly tax environment, a strong business ecosystem, and a secure, tranquil environment.

Mohandas Pai, a leading chartered accountant and the Chairman of the Manipal Group, reacted to the report by describing the trend as "very worrisome" and attributed it to "tax terrorism." The former CFO of Infosys stated that the Finance Ministry is making life more difficult for HNIs, too much tax terrorism, too much complex compliance like the new TCS needs to ease.

India to lose 6,500 millionaires in 2023, Dubai and Singapore top choice. Very worrisome ⁦@FinMinIndia⁩ is making life more difficult for HNI,too much tax terrorism,too much complex compliance like new TCS.needs to ease ⁦@narendramodi⁩ ⁦@PMO https://t.co/KTYeJtSXPK

— Mohandas Pai (@TVMohandasPai) June 13, 2023

Dr Apoorva Ranjan Sharma, Co-founder and MD of Venture Catalysts and 9Unicorns, responded to the same issue by stating that the government should prioritize transforming India into a tax haven, with a rich-friendly taxation system and simplified compliance processes.

"By fostering an environment where the rich are incentivized to stay and invest, we can curtail tax evasion and encourage reinvestment within the country. This approach would not only benefit the wealthy but also contribute to the overall economic growth," Dr Ranjan continued.

He believed that for India to aspirationally become a global hub for investment and wealth creation, the government should take inspiration from Dubai's success in creating a favourable tax environment. As Ranjan underlined, "by leveraging entities like GIFT City, we can attract high-net-worth individuals and businesses, benefiting both the affluent and the overall economy."

Millionaire exodus is not especially alarming

The outflows aren't thought to be particularly concerning, though, given India's ability to produce new millionaires. India's HNWI population is expected to grow by an astounding 80% by 2031, according to global wealth intelligence firm New World Wealth, making it one of the world's fastest-growing wealth markets during that time.

"India exhibits a substantial wealth presence, with a current estimate of 357,000 HNWIs living there. There are many wealth hubs in Asia, and just this year, the number of inquiries from South Asia in the first four months of 2023 accounted for 72.2% of all inquiries in the prior year, which was by itself a record year," according to Rohit Bhardwaj, Director, private clients, Henley & Partners India. "Indian investors have shown a desire for other residencies and multiple citizenships, therefore we anticipate this rising trajectory will continue this year."