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By Parth Vakil

The unfolding of India’s growth story has propelled a sharp uptick in the number of high—and ultra-high-net-worth individuals (HNIs/UHNIs) across the country. According to Knight Frank’s The Wealth Report 2024, the number of Indian UHNIs—those with a net worth exceeding USD $30 million—is expected to rise by another 50%+ over the next five years. These ‘one-percenters’ are now seeking new and innovative ways to utilize their accumulated capital effectively.

For this enterprising and affluent segment of India’s population, succession planning has now become a top-of-mind issue. Families are concerned not only with growing their wealth but also investing it in the next generation by leveraging their resources to equip the latter with the necessary tools to pursue their aspirations.

Investment Options for the Indian Elite

There is a wide array of financial assets available to Indian HNIs/UHNIs, with options ranging from real estate and physical commodities to equity funds and venture capital. Recently, we’re seeing massive inflows of capital into domestic equities (e.g., Indian stocks), as investors have redirected funds from properties and gold into the free-flowing, high-upside equity markets fuelled by strong private sector performance of listed companies.

Fixed income (e.g., bonds and fixed deposits) also typically plays a role in the overall asset allocation for Indian HNIs/UHNIs, providing stable and predictable performance relative to its equity counterparts and the associated short-term market swings.

NBFCs are becoming increasingly important, with private credit and alternative lending stealing market share from traditional fixed income.

For those with substantial resources, ‘private markets’ have become another attractive option, with venture capital and private equity funds gaining traction with investors seeking returns over and above those offered by public markets.

Global Appetite

Another investment theme within India’s affluent class is exploring opportunities in overseas markets. Global diversification reduces their exposure to a single geography, thereby mitigating risk. Capital mobility and increased accessibility have attracted Indian investors to other markets, particularly the US and to a lesser degree – the UK.

Given the strong performance of the Indian stock market and sustained economic tailwinds, many Indian families look to developed markets like the US as an investment destination offering an enhanced level of stability and reliability relative to what is available domestically.

As the hub of global investment, the US capital markets provide Indian families with access to sophisticated investments that simply do not exist elsewhere. The “safe haven” status of the US dollar serves as a hedge against currency fluctuations eroding purchasing power over the long-term, in turn facilitating wealth preservation for future generations.

Investing for the Future: America’s ‘Golden Visa’

Establishing an offshore asset base has long been a trend for wealthy Indians; it affords them more flexibility with respect to expanding their businesses, traveling, and diversifying wealth. In the same vein, affluent families in India look to countries like the US as a source of opportunity for their children. Many Indian HNIs/UHNIs are now remitting funds to America not for their own benefit, but rather to invest in future “optionality” for the next generation.

One such illustration of this is the renewed demand for America’s ‘Golden Visa’ program, the EB-5 Immigrant Investor Program.

An increasing number of Indian families are utilizing their wealth to create opportunities for their children by leveraging this residency-by-investment initiative, whereby any lawful Indian can attain US permanent residency by investing USD $8,00,000 (~7cr INR) into a new commercial enterprise that results in the creation of 10+ American jobs.

Once the EB-5 program requirements have been met, a green card is granted to all eligible family members and the investor may elect for their capital to be repaid.

The benefits of permanent residency status are immense. Green card holders have a leg up in college admissions, particularly to elite US institutions. They are also afforded complete freedom in the job market, as they are not beholden to the shortlist of companies willing to provide the employer-sponsorship required for a traditional work visa. Similarly, they may choose to embark on their entrepreneurial journey, affording them the freedom to start their own business.

I would argue that there has never been a better time in history for India: it has claimed its stake as a global superpower; it is the fastest-growing major economy in the world; its demographics are extremely favourable; its robust business climate will continue to foster innovation and growth.

For the affluent class with ample resources, this presents the opportunity of a lifetime. By effectively utilizing the wealth they’ve accumulated to invest in their family’s future, they can rest assured that the greatest beneficiary of India’s ascent will be the next generation.

(Author is Founding Partner, Ek.indUS)

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