How to set up a family office abroad? More wealthy Indians want to know

Indian business owner families are enquiring about the process of setting up offices outside India. The enquiries have registered a spike and primarily came from wealthy Indian business owners, according to a report by Financial Express (FE). The questions included topics such as RBI regulations around establishing such a setup.

Notably, the Reserve Bank of India (RBI) introduced changes in overseas investment rules in August last year. The change permitted profitable non-financial entities to establish financial services offices abroad and allowed firms to invest up to 400 per cent of the investing firm's net worth.

Market experts expect RBI to release relevant FAQs about layering, portfolio investments, and pricing guidelines with regard to the new overseas investment rules. The new rules permit transactions by Indian firms in foreign firms. However, the firm can not have more than two layers of subsidiaries, directly or indirectly, the report said.

According to experts, high-net-worth individuals want to set up overseas family offices for several reasons. First is their desire to relocate and settle abroad for better education, lifestyle, and new opportunities. The report further said that many find the tax regime in India too costly, and that may be one of the primary reasons for considering relocation.

For Indians, Dubai and Singapore are popular destinations. Significantly, Singapore recently opened an agency to welcome family wealth management firms. The two locations are among the most appealing for millionaire migrants. 

Singapore and Dubai are preferred destinations given their status as financial hubs, proximity to India, and favourable tax regime. These jurisdictions also have robust judicial and arbitration structures in place, which inspire confidence in case a firm gets into any disputes or separations within families, the report said, quoting a finance professional.