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Following their graduation from Western or European colleges, many of these students prefer to gain work experience in the host country, and perhaps become residents. For U. S.-educated international students, the EB-5 program can be a positive alternative to seeking H-1B visas. If wealthy Indian parents“ gift” their children EB-5 funds prior to sending them to college, not only would they pay lower tuition fees as U. S. residents, but the post-graduation visa concerns would be eliminated. Furthermore, only the children would be subject to the IRS.
Migration agents and popularizing EB-5
While it may take some time to educate the few existing Indian migration agents about the EB-5 program, it should be simple to establish an EB-5 network. Concentrated EB-5 networks can be developed in areas such as New Delhi, Bangalore, Chennai, Chandigarh, and Mumbai. While Indian migration specialists are typically more knowledgeable about alternate U. S. visa programs, the EB-5 program should be a simple addition to their roster. In addition to working with existing migration agents, EB-5 developers can network with wealth managers, immigration attorneys, and multinational company representatives to expand their reach in India. Once these relationships are developed, it should be relatively easy to popularize the EB-5 program in India. A distinct advantage the Indian market offers over the Chinese one is that English is the lingua franca in India, making it easier to develop direct personal relationships.
International competition and investor reluctance
Many other countries offer investment immigration schemes that compete with the U. S. EB-5 program, and some are more popular in the Indian market. For example, Portugal, Ireland, and Macedonia all offer foreign investor residency programs. Cyprus and Austria offer full citizenship in exchange for an appropriate investment. The islands of St. Kitts and Nevis, Antigua and Barbuda, and Dominica all“ sell” citizenships to foreign investors. Closer to India, the UAE and Singapore offer similar residency programs. The most notable EB-5 competitors are the programs of Canada, Australia, England, and New Zealand. The respective investment amounts of these four programs range from approximately $ 750,000 USD upwards to over $ 4.5 million. All of these exceed the minimum $ 500,000 amount for an EB-5 project located in a targeted employment area.
So then why are most wealthy Indians not as keen to immigrate to the United States? Their apparent rationale is that they enjoy a standard of luxury and status in their home country that far outweighs what they might be able to afford in the United States. There may also be a generalized reluctance to be subject to the jurisdiction of the Internal Revenue Service. Even so, I think these concerns are surmountable, as the United States is the most desired education destination for wealthy Indian children.
Return on investment
In my experience, it seems that a key difference between Indian and Chinese investors is that, while most Chinese investors are content both with a low return on their EB-5 investments and passive managerial roles in EB-5 projects, Indian investors typically value a higher return on investments, and sometimes greater managerial roles in EB-5 projects. In addition to various lucrative investment opportunities in India, these investors have access to high-yielding savings accounts in India. Indian banks currently offer certificates of deposit carrying interest rates as high as 8-11 percent annually for rupee-denominated accounts. Given such investment alternatives, the investor must esteem U. S. residency in order to apply for the EB-5 program. EB-5 developers should consider marketing direct and pooled-direct EB-5 projects, since they typically carry higher returns on investments and are structured as equity deals. Similarly, as EB-5 developers are not obligated to compete for marketing agents’ attention, as in China, they are not subject to high agent fees. Therefore, EB-5 developers may have greater economic capacity to provide higher returns on investments to Indian investors. Ultimately, if a target EB-5 market can be established, then regional center projects can likewise enter the Indian market.
Capital outflow limits
Even if migration agents are properly educated about EB- 5, and projects are successfully marketed to Indian investors, Indian nationals face fundamental obstacles to international investment. Earlier this year, in an effort to stem the balance-of-payments crisis and prevent the incipient signs of capital flight, the RBI capped annual remittances at $ 75,000 from a previous high of $ 200,000. Somewhat similar measures were placed on Indian firms. India’ s current finance minister, P. Chidambaram, publicly stated that the RBI measures were“ temporary” and would be revisited“ at an appropriate time.” In the meantime, how should potential EB-5 investors handle this issue? Generally, the initial response is to turn to friends and family for assistance in remitting these funds. Additionally, many Indian UHNWIs already maintain bank accounts in Singapore, the Gulf, or Mauritius. As such, any transfers from their foreign bank accounts will not be subject to the RBI cap.
14 EB5 Investors Magazine