RBI dashes green card dreams of rich Indians
Rich Indians planning to invest in a business or buy property in some foreign countries to gain permanent residency find their dreams shattered, with the central bank reducing the limit for remittances made by individuals to $75,000 from $200,000 per financial year and banning the purchase of property outside India.
Countries such as the US, UAE, Australia, Bahamas, Spain, Mauritius and parts of Canada offer permanent residency and fast-track green card to those who invest in businesses or property there. The US EB 5 visa offers a fast-track green card if one invests $500,000 in a business.
Buying a property worth $500,000 gets you a permanent residency in the Bahamas. In Australia one has to invest A$5 million to qualify while in the UAE, foreign property buyers are automatically given a three-year residency permit.
Withdrawing Applications for Foreign Residency
"My clients are withdrawing applications for the US, Australia and Canada. They have the money, but cannot invest as they cannot remit as much," says immigration attorney Sudhir Shah, who has offices in Mumbai and Gujarat. Earlier, clients could pool in the minimum investment amount (to qualify for a permanent residency) by getting just three people to invest.
But now they need many more people to participate, which is not only difficult to organise but such arrangements also stand a higher chance of getting rejected by RBI.
In the last few months, a stronger dollar has already made it more expensive for people to invest in such schemes. On Monday, the rupee closed at 63.13 to a dollar. The rupee has tumbled 13% against the greenback so far this year and several measures by the RBI have not managed to arrest the slide.
A diamond merchant from Surat, who wanted a US residency to facilitate his children's higher studies in the country, had readied an EB 5 application and the $500,000 investment. He has now put his plan on hold as he needs to convince more members of his family to pitch in.
"My plans have been pushed to 2014," he said, asking not to be named. "If the new rule persists, it will dissuade people from applying for such schemes," says Anupam Saxena, head-operations at EB 5 India, a company that helps individuals with the EB 5 process.
Like the EB 5 scheme, Canada's Quebec province runs an investor programme, which gives permanent residency to immigrants who can invest $800,000 in the province in the form of a guaranteed, interest-free loan. A few clients of Mumbai-based immigration lawyer Poorvi Chothani applied under this scheme recently and paid significant amounts as government fees.
If her clients get selected, under the new guidelines they would find it very difficult to raise $800,000 to be remitted. "I am not sure how it will work. I am keeping my fingers crossed and seeking some clarity from RBI," she says.
"The weakening rupee itself has been a big dampener. And now with the lowering of the remittance limit, there are not many options left for Indians seeking permanent residency abroad through such schemes," says Delhi-based tax consultant Amitabh Singh while hoping these are temporary measures that would be in place till India's current account deficit position improves. In Punjab, which is the hub of immigration and where several individuals would not qualify on skills alone, there is a huge interest among people in applying for EB 5 and Quebec investor programmes that are being marketed in a big way by consultants. The RBI curbs have come as a rude shock to many who have been in the queue over the last few years.
"They just can't make the cut monetarily. It is a sudden reduction in the limit and even if they have the money for a certain programme, they will find it difficult to bypass RBI," says Chandigarh-based immigration lawyer Anil Malhotra. The move by RBI is also impacting people who wanted to buy property in prime cities where their children are studying and need a home to live in.
A CEO of a multinational general insurance company had been negotiating a deal to buy a two-bedroom apartment near Canary Wharf in London. His son had recently secured admission in a prominent college in the UK and he wanted to buy the property for him.
While most of the formalities were over, he was hoping the money could be remitted once his wife would visit the place in late August. Now the deal has been shelved after RBI's new regulations. "Several such deals have been put off over the last few days," says Om Ahuja, chief executive officer, residential services, Jones Lang LaSalle India.
Many HNIs who wanted to invest in international property are now expected to look at options in the luxury homes market within the country. Mudassir Zaidi, regional director for global property consultant Knight Frank in India, says several of their deals that were in the negotiation stage have been put on hold for now.
"We are trying to get clarity on the fate of transactions where people had already paid deposits to buy a property," he says.