The new EB-5 Immigrant Investor Program is leading to a surge in Indian applicants for the EB-5 Visa ahead of the fee hike from November. The Trump administration recently announced significant changes to the EB-5 visa program including a rise in the standard minimum investment from $1 million to $1.8 million.
For Targeted Employment Areas (TEA) where unemployment is high, minimum investment requirement has been raised to $9,00,000 from $5,00,000 owing to a 50 per cent difference in investment amount between TEAs and non-TEAs. The new rules will be effective from 21st November, 2019. The final rule will also state that the investment amounts will ‘automatically adjust to inflation every five years.’
This is the first time since 1993 that the rules have been altered significantly. The hike in the investment requirements effective November will lead to an upsurge in Indian applications for the visa program in the upcoming months.
“LCR Capital's local offices in Mumbai and Dubai have never been busier,” said Rogelio Caceres, co-founder and CCO of LCR Capital Partners, An EB-5 Regional Center. “We anticipate an increase of 300 per cent in the number of new Indian EB-5 investors over last year's already record-breaking levels. Indians know the value of a great deal when they see one. The ability to invest at the same amount as the program cost in 1990 is definitely worth considering seriously before the price increases to $900,000 to $1.8 million,” he said.
The surge in applications will also lead to a longer waiting period for Indian applicants applying for EB-5 visa post November, further delaying the procedure for green-card.
Vivek Tandon Founder and CEO of EB5 BRICS, an EB-5 advisory firm said, “There is likely to be a huge surge in EB-5 applications from all over the world with investors seeking to apply under the old rules until November 21. This will lead to delays in processing and adjudication of applications and those applying after November 21 may face a significantly longer waiting period. Considering India is already hit by visa retrogression, those planning to apply later may have to wait much longer than the current five-six year wait for beginning conditional permanent residence in the US.”
Changes to TEA pose High Risk
To avoid potential gerrymandering, TEAs will now be authorised by the Department of Homeland Security (DHS) rather than the State based on ‘revised requirements in the regulation.‘ This will drive more investments towards rural areas posing high risks for Indian investors, according to experts.
“This is a very significant change, may be even more significant than the investment hike,” said Tandon. “Post November 21, TEAs shall be designated solely by the DHS based on a uniform criteria for the entire country. Further, the new rules clarify that there cannot be any TEAs in Metropolitan Statistical Areas with a population in excess of 20,000. Going ahead, Indians will either have to invest in rural areas or high-unemployment areas outside cities or skip the $900,000 option and invest $1.8 million for the EB-5 visa. This change actually increases the risk for Indian investors because risks involved in setting up a viable project in non-urban areas will be significantly higher.”
Despite hike in prices and high risk for investors, the new rules may not drive investments home, partially as a bulk of E-B 5 demand comes from Indians already residing in the US. “There may be a dip in the short-term but the program will continue to remain very popular with Indians. Considering the current chaotic H-1B setup and the long waiting periods for EB-1 to EB-3 category green cards, the EB-5 visa, despite the increased investment threshold, remains the most stable and most transparent route to the US green card. Further, the bulk of Indian EB-5 demand comes for those already in the US on work permits or with pending green card applications. For them, the benefits of a US green card far outweigh the costs, even after this recent increase in investments.” he said.
( The writer is an intern with Business Line)