Wealth Management

The flight of wealth: should we worry?

March 2018

Read Time: 4 minutes

Recent reports of 7,000 Indian dollar-millionaires having left the country last year have revived fresh fears about wealth drain and its trickle-down effect on the economy. 

According to a study by Morgan Stanley Investment Management, a total of 23,000 wealthy Indians (with net assets of more than $1 million) left India over the past four years, moving to countries like the UK, Dubai and Singapore. The analysis goes on to say that this set represents 2.1% of the total millionaire population. The 2.1% figure seems high when compared with China’s 1.1%. Are rich Indians in a hurry to leave the country as soon as they can afford to?

We don’t think this trend is overly alarming. Millionaires migrating is neither a new nor surprising phenomenon globally. Around 12,000 French and 8,000 Brazilian millionaires left their respective countries in 2016. The numbers for India and China were 6,000 and China 9,000 respectively, for that year. China has lost wealth of around USD 3.8 trillion over the past 10 years as millionaires left the country. Even with such tremendous capital outflows, China’s growth story has had tremendous traction. And we are sure it will be no different in the case of India. 

India has 2% of the world’s millionaires and 5% of the world’s billionaires, and these numbers are on the rise. According to Credit Suisse’s latest Global Wealth Report, India has 2,45,000 millionaires and this number is expected to reach 3,72,000 by 2022. Wealth in India has grown by 10% over 2016-2017, with the rate being second only to the USA’s 10.1%. Household wealth in India is expected to reach USD 7.1 trillion in 2022 from USD 5 trillion in 2017. 

So, while more millionaires are leaving the country, one must note that more millionaires are also being made in the country. Even in the case of migrating individuals, it must be noted that most of their investments, especially real estate, continue to be in India. 

Let us take a step back and see why an Indian millionaire would consider leaving the country. Several factors could be at play here:

Better opportunities in developed countries:
Developed markets offer exciting opportunities for both businesses and individuals. For the next-gen rich, global universities can often offer exposure and connections that are unavailable in India. Similarly, businesses can conduct cutting-edge research and gain access to resources that are scarce in India, whether infrastructure, technology or talent. For e.g.: a listing in the U.S. stock exchanges is extremely tough if the company is domiciled in India.


Given that a large number of the migrating wealthy Indians are moving to West Asia and Singapore, achieving optimal tax structures could also be a significant factor driving their decision to leave. 

Global diversification:

Having established businesses in India, several rich Indians now want to diversify their holdings. With capital account convertibility still restricted in India, most companies and individuals have limitations on how much they can invest abroad.  According to a May 2017 article in The Economic Times, last year, Indians remitted a record USD 4.6 billion overseas under the Liberalised Remittances Scheme (LRS), as against USD 1.6 billion, the previous year. These remittances are used typically to support the maintenance of close relatives, to fund overseas education and for investments such as real estate purchases. The spurt in these remittances, in our opinion, shows the intent to diversify among rich Indians. 


Globally, wealth migration is accelerating. Around 95,000 millionaires left their countries last year, as against 82,000 in 2016 and 64,000 in 2015, according to a NW World report. India therefore, is following the global trend in wealth migration. When seen in conjunction with the rate of growth of millionaires in India, and the economic outlook for the country, the trend seems far less overwhelming. We believe that India’s evolving “land of opportunity” canvas will continue to attract the attention of the affluent and an immense amount of “made in India wealth” will continue to reside and grow within the country.  

Author: George Mitra, MD & CEO, Avendus Wealth Management

Stay updated with the latest at Avendus