Indian Ultra-HNIs are going global: Key trends in cross-border investment

With the growth of the Indian economy, there is a surge in high-net-worth individuals (HNIs) and ultra-high-net-worth individuals (UHNIs). India now ranks 4th globally in terms of super-rich individuals, trailing only the U.S., China, and Japan¹.

As a foreign direct investment (FDI) specialist, I’ve observed how Indian Ultra-HNIs are increasingly looking beyond domestic markets. Their focus spans overseas real estate, global equities, private equity funds, and cross-border business setup. The motivation behind it is wealth preservation, tax efficiency, and global lifestyle aspirations. Kotak Private Banking’s Top of the Pyramid (TOP) Report 2024 ² and Wealth Reports from Knight Frank and Hurun ³ offer deep insights into this trend.

1. Who Are Indian HNIs and UHNIs?

• India has 85,698 individuals with a net worth over $1 million, making it the 4th largest globally.
• Ultra-HNIs (net worth above $30 million) have grown by 12% in 2024, with Mumbai, Delhi, and Bengaluru leading.
• Over 15% of India’s HNIs are under 30 years old, indicating a new generation of wealth creators, mainly from the tech, startup, and investment sectors⁴.

Sources of Wealth
The main sources of wealth for Indian HNIs and Ultra HNIs are:

• Entrepreneurship: A large number of HNIs and Ultra HNIs are the creators or owners of prosperous companies in industries such as manufacturing, technology, pharmaceuticals, and real estate.
• Inheritance: Family companies, particularly in traditional industries like textiles, commerce, and real estate, account for a sizable share of the wealth of India’s affluent citizens.
• Stock Market Investments: Many investors have made money thanks to the thriving Indian stock market, especially those who made early investments in firms like TCS, Infosys, and Reliance.
• Real estate: Investing in real estate, particularly in big cities like Bangalore, Delhi, and Mumbai, has been a significant way to build wealth.
• Professionals: The increase of HNIs is also being fuelled by high-earning professionals in industries like technology, law, and finance.

2. Where Are Indian Ultra-HNIs Investing Overseas?

A. Global Equities & Private Equity Funds

• 62% prefer aggressive equity exposure via U.S. tech stocks (FAANG, AI-driven sectors) and UK blue-chip investments.
• Private Equity & Venture Capital: Increasing allocations to U.S., Singapore, and London-based PE/VC firms.
• Liberalised Remittance Scheme (LRS): Many utilise the $250K/year cap to invest internationally. As of October 2024, external remittances via LRS were more than USD 2400 million, according to the IFSCA Bulletin.

B. Overseas Real Estate

C. Business Setups & Migration-Linked Investments

• 20% of Ultra-HNIs plan permanent migration (Kotak Report 2024).
• Popular Investment Structures:
  • Singapore Holding Companies (for Asia-centric investments).
  • UAE Free Zones (0% corporate tax, ease of setup).
• Golden Visa Programs: Portugal (€350K+), Malta (€750K+), offering residency through investment.

D. Alternative Investments (Collectibles, Digital Assets)

• 24% of Ultra-HNIs own or plan to buy NFTs, surpassing crypto investments.
• Luxury Collectibles: Investments in rare watches, classic cars, and art are increasing.

3. Why the Surge in Cross-Border Investments

Driver	Example
Wealth Preservation	Shield assets from INR fluctuations and political risks.
Tax Efficiency	UAE’s 0% income tax vs. India’s 30%+ slabs.
Lifestyle Upgrades	Second homes in Europe; U.S. education for children.
Business Expansion	69% migrate to ease international operations.
Succession Planning	Offshore trusts in Cayman Islands, BVI for inheritance planning.

Key Insight: Global investments are not just about returns; they are a means of securing citizenship, lifestyle, and legacy planning.

4. Challenges in Cross-Border Investing

A. Regulatory Barriers

• RBI’s LRS Limits: The $250K/year cap on foreign investments poses a hurdle.
• SAFE Note Ban: RBI’s 2024 ruling restricts unlisted overseas investments ⁵.

B. Tax Complexities

• Double Taxation Treaties (DTAA): Used to optimise tax exposure.
• Controlled Foreign Corporation (CFC) Rules: Offshore entities owned by Indians face taxation challenges.

C. Currency & Liquidity Risks

• INR Depreciation: Affects global purchasing power.
• Forex Hedging Strategies: Essential for Wealth Protection.

Solution: The rise of family offices (300+ in India) is helping Ultra-HNIs navigate regulatory and tax hurdles.

5. Future Trends to Watch:

A. Migration-Driven Investments

• 20% of Ultra-HNIs are actively seeking second citizenship.
• Estate Planning: Trust structures to avoid inheritance issues.

B. GIFT City as a Financial Hub

• Tax-Free Investment Options: 10-year tax holiday for global funds.
• ESG & Impact Investing: IFSCA’s incentives for green investments.

C. Digital Assets & Fintech Investments

• NFTs see 24% adoption among HNIs, surpassing cryptocurrencies.
• Web3 Startups: India’s growing fintech sector attracting global HNI participation.

6. Conclusion: What’s Next?

As Indian Ultra-HNIs expand their global footprint, navigating cross-border investments requires more than capital. This is where FDI professionals bring unparalleled value in terms of:

• Identifying High-Growth Global Opportunities
• Regulatory & Tax Optimization
• Residency & Business Expansion Advisory
• Leveraging a Global Network

For HNIs, family offices, and wealth advisors, partnering with seasoned FDI professionals ensures that global investment strategies align with wealth preservation, lifestyle aspirations, and legacy planning

References:

1. https://www.ibef.org/news/india-ranks-fourth-globally-with-85-698-super-rich-behind-the-united-states-china-and-japan.
2. Kotak Private’s Top of the Pyramid Report.
3. https://www.knightfrank.com/wealthreport.
4. https://www.indiabusinesstrade.in/news_buzz/over-15-of-indias-super-rich-are-under-30/.
5. https://economictimes.indiatimes.com/news/india/the-lure-of-reward-multipliers-how-hnis-vcs-have-become-allies-on-a-steep-learning-curve/articleshow/118486793.cms?from=mdr.