India’s wealthy have increasingly been looking beyond the country’s borders as taxation, regulation and broader economic uncertainty influence decisions about where to live, invest and preserve wealth.

A February 13, 2021 report in the Times of India, “Indian rich top world in looking to leave country,” reported that wealthy Indians were again among the world’s most active users of residence-by-investment and citizenship-by-investment programmes. The report noted that enquiries had increased in 2020 despite the disruption caused by COVID-19 and that approximately 7,000 wealthy Indians had left the country in 2019.

The significance of this is broader than the number of individuals involved.

For high-net-worth individuals, international mobility is increasingly becoming part of wealth planning. Residence, taxation, investment diversification, family security and long-term optionality are no longer necessarily tied to a single jurisdiction.

Taxation and the Indian Wealthy

India’s tax environment has become an increasingly important consideration for internationally mobile Indians.

The government’s 2020 Finance Bill proposed a significant change to the rules governing tax residence, including a provision under which an Indian citizen could be deemed resident in India if he or she was not liable to tax in another country or jurisdiction. The Indian Ministry of Finance subsequently clarified that the provision was aimed at individuals attempting to avoid taxation by moving to low- or no-tax jurisdictions and that it was not intended to tax the foreign income of bona fide workers abroad.

The debate nevertheless highlighted a fundamental issue for wealthy Indians: tax residence matters.

For an individual with substantial international assets, changing physical residence does not automatically mean changing tax residence. The interaction between domestic residence rules, source taxation, treaty provisions and the location of assets can be complex.

That complexity itself can become an incentive to examine alternative jurisdictions well before a move is actually made.

The United Kingdom Is No Longer the Automatic Choice

For generations, the United Kingdom was a natural destination for wealthy Indians.

Historical connections, language, education, business relationships and the substantial Indian diaspora made Britain an obvious choice for families looking to establish an international base.

Brexit, however, changed the strategic calculation.

The United Kingdom formally left the European Union on January 31, 2020, followed by a transition period that ended on December 31, 2020. From January 1, 2021, the UK’s relationship with the European Union changed materially.

For wealthy Indians considering European residence, the distinction is important.

The UK remains a major global financial centre and an attractive jurisdiction in many respects. But it is no longer an EU member state.

That means that an Indian entrepreneur or investor considering a European base has a different set of options to evaluate than was the case before Brexit.

Portugal Becomes More Interesting

Portugal therefore deserves attention.

The country’s Golden Visa programme had already established itself as one of Europe’s better-known investment-residence programmes, offering qualifying non-EU nationals a route to Portuguese residence through specified forms of investment.

Importantly, Portugal had also developed an investment-fund route.

This was significant because the investment-fund route offered something different from simply buying property.

For an investor seeking European residence, the attraction could be the combination of jurisdictional diversification and investment exposure, rather than merely acquiring a second property.

Optionality Has Value

The real attraction of an investment-residence programme is not necessarily that the investor intends to leave India tomorrow.

It is the ability to create an alternative.

An entrepreneur can establish a European base while continuing to operate an Indian business. A family can obtain residence rights while deciding where its children should eventually be educated. An investor can diversify part of a portfolio internationally without immediately abandoning existing commercial interests.

In an uncertain world, optionality has economic value.

This is particularly relevant to wealthy Indians because the decision to relocate substantial wealth or an entire family is rarely binary. It is generally a process.

First comes research.

Then diversification.

Then a residence option.

Only later, if circumstances warrant it, may a permanent relocation become necessary.

Wealth Migration Is About More Than Tax

Taxation is an important component, but it is not the only consideration.

High-net-worth individuals increasingly evaluate jurisdictions according to a combination of taxation, political stability, regulatory predictability, access to markets, education, healthcare, personal security and the ability to preserve family wealth across generations.

This is why the wealth-migration phenomenon should not be confused simply with tax avoidance.

It is better understood as jurisdictional diversification.

A wealthy individual may maintain a principal business in India, investments in several international markets and residence rights in another country. The objective is not necessarily to sever ties with the home jurisdiction, but to avoid having every element of family and financial life dependent upon one political and economic system.

The same principle underlies the considerations discussed in US Taxes Set to Rise, where changes in the U.S. tax environment were beginning to raise questions about the future location of wealth.

India and the Global Wealth Competition

India is not competing for wealthy individuals in isolation.

Countries around the world are actively seeking entrepreneurs, investors, family offices and high-net-worth individuals who can bring capital, business activity and international connections.

Portugal is one example.

Other jurisdictions offer different combinations of tax treatment, residence rights, investment opportunities and access to international markets.

For a wealthy Indian, the question is therefore no longer simply whether India remains an attractive place to conduct business.

It is whether India remains the optimal jurisdiction for every component of the individual’s personal and financial life.

That is a much more difficult question.

The Importance of Timing

One of the most important considerations in wealth migration is timing.

By the time an individual has decided that relocation is necessary, the most attractive options may have become more expensive, more restrictive or unavailable.

Investment migration programmes can change. Tax laws can change. Immigration rules can change. Investment thresholds can change.

Consequently, wealthy individuals should consider their options while those options are still available rather than waiting until a political or economic event forces a decision.

The point is not necessarily to leave.

The point is to have the ability to leave.

That distinction is fundamental.

A Broader Pattern

The movement of wealthy Indians should also be considered alongside a broader international trend.

Wealthy individuals in emerging markets increasingly examine international residence and citizenship options as part of broader wealth-planning strategies.

The same logic applies in India.

The lesson is that residence programmes should be viewed as part of a wider strategic landscape rather than as isolated immigration products.

Rich Indians Are Looking Elsewhere

The increasing interest among wealthy Indians in international residence programmes is therefore not simply a story about people wanting to leave India.

It is a story about wealth becoming increasingly international.

The wealthy can diversify their investments.

They can diversify their businesses.

They can diversify their banking relationships.

And increasingly, they can diversify their residence options.

Portugal’s Golden Visa programme provides one such option, particularly through its investment-fund route, which by 2021 offered a means of obtaining residence exposure without relying exclusively on residential property.

For wealthy Indians, the strategic value lies in having alternatives.

The decision to relocate may never actually be made.

But having the ability to relocate can itself provide valuable protection against future changes in taxation, regulation or political conditions.

In wealth management, optionality is an asset.

And increasingly, wealthy Indians appear to understand that.