Expert Interview: The EB-5 Visa Lifecycle for Indian Investors

By Zofeen Maqsood

Expert Advice on everything from Initial Investment to Green Card Approval

In the recent years, India has become one of the fastest growing markets for the EB-5 applicants who are looking to migrating to the United States. The move to US for most Indians is often governed by a desire for better educational, business and career opportunities for themselves, their families and primarily their children.

Indian Americans are the most educated population in the United States. As per a report by the Pew Research Center. Indian Americans also have the highest income levels, earning $65,000 per year with a median household income of $88,000, far higher than the United States household average of 49,000

EB-5 experts say, if wealthy 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.

The EB-5 U.S. Immigrant Investor Visa Program is available to India citizens. There is growing demand for this among Indian citizens from Chandigarh, Punjab, Delhi, Ahmedabad, Gujarat, Mumbai, Pune, Bengaluru, Bangalore, Chennai, Hyderabad and many other cities and states in India.

Here, Vivek Tandon, a lawyer and an investment banker, who helps in educating investors in India and Dubai about EB-5 Visa Program answers some commonly asked questions pertaining the EB-5 Visa

Hi India: Recently the EB-5 Program expanded its scope to include more diverse economic sectors. What would this really mean?

Vivek Tandon: The EB-5 Reform and Integrity Act of 2022 was a landmark legislation that revived the EB-5 Regional Center program and settled the confusion and uncertainty around the minimum investment requirement. Another significant change that the law introduced was the reservation or set aside of 20% of all EB-5 visas to rural projects, 10% to urban Targeted Employment Area (TEA) projects, and 2% to infrastructure projects. This has resulted in the geographical and sectoral diversification of EB-5 Regional Center projects, which has given investors access to a wider range of options when comparing EB-5 investment options.

Hi India: What is the Diversification Advantage for EB-5 Investors?

Vivek Tandon: To qualify for the EB-5 visa, an investor must make an at-risk investment of $800,000 in a commercial enterprise and create ten full-time jobs in the US. While it is possible to qualify for permanent residence even if the investment fails, every EB-5 investor would want the green card and recover the $800,000 investment. Choosing a project that will create the ten jobs and repay the investment through sale or refinancing in four to six years can be a very complex decision. The ability to choose from a diverse range of projects operating in different sectors in different parts of the US can help EB-5 investors mitigate risk and improve the chances of recovery of the investments.

Hi India: How do rural investment offer advantages for E-B5 investors from India?

Vivek Tandon: The option of investing in rural projects has been a part of the EB-5 program since its inception. However, until recently, a significant majority of EB-5 projects were concentrated in Targeted Employment Areas or urban areas with 150% unemployment compared to the national unemployment rate. Investors had very few rural projects to choose from as most EB-5 projects were concentrated in the urban real estate sector. Developers preferred such projects because it was easier to create the required number of jobs. However, investors had to bear the increased risk of concentration of EB-5 investments into a narrow pool of assets.

The set aside of 20% of the annual quota of 10,000 EB-5 visas to rural projects has resulted in a sharp rise in interest among EB-5 investors, Regional Centers, and project developers alike.

Rural investments further offer the additional advantages of priority processing and the absence of backlog for EB-5 investors from China and India.

Has this also opened up diversified options for investors?

The focus on rural areas have led to the focus shifting beyond real estate and construction projects. Not all EB-5 project ideas designed for execution in an urban area may make business sense in a rural area.

This has prompted Regional Centers to explore projects in manufacturing, mining, renewable energy, and other sectors. In the past, developers cited a lack of investor interest as the reason for avoiding unconventional EB-5 project ideas while investors complained about the absence of diversified options beyond urban real estate projects. The set asides have effectively broken this vicious cycle and both developers and investors are exploring rural-centric business plans and projects.

The rise of diversified options in rural areas can help investors mitigate the risk of the adverse sectoral impact of a recession or an economic slowdown, Earlier, EB-5 investors had very little protection from any economic, technological, regulatory, or even geopolitical risk hurting the real estate or construction industry.

Now, an investor seeking to safeguard his or her EB-5 investment from such risks has the option of exploring rural projects operating in a completely different sector.