India a potential destination for rich retirees

Affluent pensioners from across the globe can offer a unique business opportunity in the country

Now that there is a buzz about 100 smart cities being built across India, the country must wake up to its potential as a destination for affluent pensioners/retirees from across the globe. Here’s why this segment offers a unique business opportunity for the country.

Expense: Life in most developed countries is relatively expensive — and for the aged, quite inconvenient. That’s because of the social structure where nuclear families predominate, leaving pensioners to fend for themselves. Of course, the latter can move to retirement homes, and welfare states do support pensioners. However, performing daily chores by oneself in old age is a daunting task, even simple tasks like visiting a departmental store. In contrast, India provides comparatively accommodation and domestic services. This is despite the fact that cost of living in India has also grown by leaps and bounds in recent years. But the recent movement of the Indian rupee will work to retirees’ advantage, as every dollar or euro can fetch more in rupee terms now.

Convenience and security: Real estate townships have come up in Indian cities which feature every imaginable convenience and facility. Living in such complexes is relatively secure, since professional security agencies and closed circuit television monitor the movement of people entering and exiting the complex. Many of these townships are expensively priced and only the affluent fraction of India’s population can afford them. Influx of foreign affluent retirees would help enlarge the demand pool for such townships, and help developers avoid situations of unsold stock of apartments or condominiums. If demand swells, it would incentivise developers to initiate more projects, which would give a fillip to ancillary industries like steel, cement, transport, materials — which are high employment generators in themselves.

Medical facilities: India aspires to become a leading generic drug manufacturer, as many drug patents approach their expiry date in western countries. This means India is competitively placed to cater to pharmaceutical demands, as one assumes that generics would lower the cost of medication significantly. High cost of medicines is a challenge for the aged across the world, and local generics manufacturing might help bring down this cost for global retirees. In the context of medical tourism, India houses state-of-the-art specialty hospitals which offer the whole range of medical care. Indian doctors have made their mark globally. While India has become a destination for patients from Asian, African and West Asian countries historically, focus on medical tourism is now bringing in patients from Europe, the US and Japan as well. Taking this trend to its logical conclusion, older patients could be persuaded to live here.

Employment for professional care-givers: India has adequate manpower to cater to caring for such people. In Indian families, the family members themselves act as care-givers to aged ones as most professional care-giver agencies are expensive. However, foreign retirees who have typically made their money at comparatively higher income levels in the US, the UK, EU, Japan or Singapore might not face the same affordability concern. Moreover, the country’s vast semi-skilled population would get access to a major employment opportunity.

Financial prudence: Foreigners who want to live relatively inexpensively and maximise the utilisation of their corpus should look at relocation. Their local currencies can buy much more in rupee terms. India now has the infrastructure and facilities to cater to such a population, all of which is available relatively cheaply. While interest rates in developed countries are low, the yield earned on their risk-free financial assets is minimal. It makes financial sense to spend their hard-earning savings in a relatively low-cost country where the earnings-expense equation is favourable. Affluent retirees might even be able to live in India only from the interest income they earn, without touching their capital or reallocating it to riskier financial assets.

Religion and culture: India is officially home to a number of religions, including Christianity, Buddhism and Islam. Most global retirees would be practitioners of one or the other and would find a place of worship in their vicinity. One does not envisage issues arising in foreign tourists practising their own religions. Also, India houses fascinating tourist attractions, which already attract foreign visitors. Retirees would be able to visit these at their leisure.

Language: English is the main business language of India. Local media, road signs, information materials are in English, apart from vernacular languages. Even low-skilled workers can converse in broken English. Next, the advantages of care-givers, medical facilities and secure townships have been discussed in above sections.

Quality, not quantity: Every country likes affluent tourists as they will spend more on local products and services, as compared to budget tourists. Visa policies of most developed countries are skewed towards this section. There is nothing wrong with this, since such affluent tourists bring in more foreign currency which supports the local tourism infrastructure. Extending preferential treatment to such long-term visitors within India’s visa policy framework would help retirees. Long-term visas are issued when an applicant demonstrates a certain level of financial security. Countries like Malaysia and Thailand, for instance, have special visa plans to enable long-term stay for elderly retirees from Japan.

Rental options: Many retirees might not want to sell their houses in home countries as they want to keep their options open about returning after a few years. Liquidating financial assets not be a desirable course of action either. In such a situation, taking apartments on rentals is a good way out. But that assumes there are enough affluent Indians available to buy the premium units in the first place.

In conclusion, there is a significant business case for India to pursue this opportunity, although a lot of groundwork needs to be done first. Once it is agreed that foreign retirees must be encouraged in India, information should be disseminated abroad. Tourism websites need to provide information on infrastructure, processes and facilities that global retirees can use to arrive at a decision and make the transition smooth. India might team up with professional agencies that cater to people looking to live abroad.

On a more wishful note, one might add that many affluent retirees would have been business owners. Living in a high-growth economy like India might make them think about investing in business again. India can also gain from the knowledge and insights of their business experience.

(The author is a finance professional)

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