EB5 Investors Magazine Volume 2 Issue 1 | Page 16

Continued from page 13
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 .
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