Why Indian exporters should consider Residency and Citizenship by Investment?

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Recently, I had an opportunity to conduct a seminar at one of the largest export promotion organisations in Mumbai, India.

After the seminar I received a lot of feedback from the audience regarding the difficulties Indian exporters are facing in exporting their goods. The common obstacles cited were government policy, international trade policy, lack of financial support from the government and insufficient knowledge about import-export regulations of other countries.

I also received feedback that it was easy to establish and do business in African countries, in the Middle East and with our neighboring countries but as far as Western countries were concerned, Indian exporters are having a hard time making their mark.

While interacting with the participants, I was surprised that none of them had given a thought to the Residency and Citizenship by Investment option as a means to expand their export business from India.

I believe this is directly related to the visa regulations of many Western countries. Exporters from China, Taiwan, Korea and even Pakistan (Group countries) have used these regulations to their advantage, while Indian exporters have been quite reticent or unforthcoming in doing so.

Exporters from these Group countries have recognized that in developed or Western countries, there are three types of buyers / importers:

  • Large buyers who come to their countries and establish purchase offices in the country. For example – Walmart.
  • Large importers who import goods and depend on foreign exporters such as them to sell them these goods.
  • Small buyers / importers who do not physically visit their countries but wish to sell the goods of these exporters from offices or shops in their home country.

To sell goods to these buyers / importers, export companies in the Group countries have realized that having a presence in the importer’s country is the most efficient and effective way to sell their goods, especially to the class (ii) and (iii) category buyers.

To have this presence,  exporters from the Group countries take advantage of the Residency and Citizenship by Investment programs of all major countries in the world. Through these programs they obtain permanent residency/citizenship of the respective country. This then allows them to conduct business in their adopted country as local businessmen.

Let’s take an example of a Green Card holding Chinese exporter versus an Indian exporter who has no residency status in USA.

A Chinese exporter will have the following advantages over his Indian counterpart while selling goods to an American importer:

  1. As the Chinese exporter has a USA Green Card, he can start his own company in USA, purchase a warehouse and office and ship goods to the American importer immediately so that they are received within 1 or 2 days. For an Indian exporter in India, it will take several days to process the order and ship out the goods. He will have to deal with a huge amount of paperwork before his goods reach USA.
  2. There is no time difference and hence communication is faster and efficient for the Chinese exporter. Whereas an Indian exporter has to be really prompt and time conscious.
  3. Payment is easy – for the importer to make and exporter to receive.
  4. Confidence level of the buyer/importer is better while doing business with a US-based Chinese supplier/exporter than India-based exporter who has never seen or interacted with.

Unless and until Indian exporters learn to explore different options such as Residency and Citizenship by Investment to their advantage, they will always fighting a losing battle against exporters from other countries.

The best analogy that can be used to emphasize this reality is that if you wish to fight, you need to get into the boxing ring. You cannot stand outside the boxing ring and try to beat your competition.

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