Roadmap for Answer Writing 1. Introduction Objective: Define friendshoring concisely and explain its relevance. Define friendshoring: Strategy focusing on aligning trade and investments with like-minded nations to reduce supply chain risks. Mention its global context: Increasing reliance on China and disruptions like Russia’s gas ...
Model Answer Better Standard of Living: Many HNIs seek better educational and healthcare facilities, work-life balance, and improved quality of life abroad. Countries with advanced infrastructure and opportunities for citizenship are attractive to them. Tax Havens: Countries like Singapore and the URead more
Model Answer
- Better Standard of Living: Many HNIs seek better educational and healthcare facilities, work-life balance, and improved quality of life abroad. Countries with advanced infrastructure and opportunities for citizenship are attractive to them.
- Tax Havens: Countries like Singapore and the UAE are favored by HNIs due to their favorable tax regimes, including low corporate tax rates, zero wealth, and inheritance taxes, which help preserve and grow their wealth.
- Golden Visa Programmes: Some countries offer residency through investment schemes (such as Portugal and the UAE), where HNIs can invest in exchange for residence and sometimes citizenship, providing an opportunity for investment diversification.
- Tax Laws in India: Stringent and complex tax laws, particularly the increase in Tax Collection at also contribute to the migration trend, as HNIs seek tax-friendly environments abroad.
- Other Factors: Issues like political instability, pollution, personal freedoms, and security concerns also motivate HNIs to migrate to countries offering a better living environment.
Economic Implications of HNI Migration
- Loss of Tax Revenue: HNIs contribute significantly to the tax revenue of India, both directly through income taxes and indirectly through consumption taxes. Their departure leads to a reduction in government revenue.
- Loss of Investment and Employment: HNIs are not just taxpayers but also entrepreneurs, investors, and employers. Their migration results in the loss of potential investments, businesses, and job creation opportunities in India.
- Loss of Reputation and Confidence: The outmigration of HNIs could signal to the global community that India’s business environment, governance, and living standards are not conducive to retaining wealth, potentially deterring future investments and talent.
Conclusion
The trend of HNIs migrating abroad poses challenges for India’s economy, particularly in terms of tax revenue, investment, and international reputation. To curb this migration, India needs to focus on improving the standard of living, implementing tax reforms, and creating a more attractive business environment to retain its wealthy citizens.
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Model Answer Friendshoring is an economic strategy where countries prioritize trade and investment partnerships with nations that share similar values, ideologies, and geopolitical alignment. It aims to reduce dependence on countries perceived as security risks, ensuring supply chain resilience. FacRead more
Model Answer
Friendshoring is an economic strategy where countries prioritize trade and investment partnerships with nations that share similar values, ideologies, and geopolitical alignment. It aims to reduce dependence on countries perceived as security risks, ensuring supply chain resilience. Factors like the overreliance on China for manufacturing and Russia’s natural gas weaponization during the Ukraine crisis have prompted countries like the USA to adopt friendshoring.
1. Enhanced Global Supply Chain Integration
2. Boosting Industry Expansion
3. Increased Investment and Export Opportunities
4. Infrastructure and Economic Development
5. Job Creation and Technological Innovation
6. Aligned Developmental Goals
Conclusion
Friendshoring presents India with a strategic opportunity to accelerate its developmental goals. However, to maximize these benefits, India must create an investor-friendly environment and implement efficient policies to remain competitive in the global landscape.
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