The EB-5 visa program is a pathway to legal permanent residence for foreign nationals who create at least ten new jobs by investing $1 million directly in a business or in a Regional Center (a United States Citizenship and Immigration Services (USCIS) designated enterprise sponsoring capital investment for EB-5 visas). Alternatively, that amount drops to $500,000, if the investment is in a targeted employment area (TEA) or high unemployment area.
China has dominated the EB-5 visa market. Invest in the USA (IIUSA) analysis shows that China captured 82.5% of EB-5 specific visas, with 10,948 applications filed in 2016. In contrast, Vietnam had 404 and India 354 applications filed last year. These are the top 3 countries for EB-5 visas.
In order to understand how EB-5s work, I talked to Rohit Kapuria, an associate at Saul Ewing Arnstein and Lehr law firm’s Chicago office who was named a Top 5 EB-5 Rising Star by EB5 Investors Magazine in 2016.
In the last five years, Kapuria’s practice has been solely focused on India and he believes that India is poised to become a significant player. From 2015 to 2016, the number of EB-5 investors from India increased by 40%. “I’ve seen the jump. I used to give seminars in India, where there used to be 20 to 200 people in a room and only 2% of the attendees would know what EB-5 was. Now when I hold those same seminars, easily 60 to 70% of the attendees know what EB-5 is,” Kapuria said, adding that he’s “very passionate about India’s development. It is a market that has been largely untapped till date, but you will be hearing more and more about it.”
Back in 1990, when Congress hammered out the specifics of the EB-5 program, wait times for employment based visas were negligent. Now the EB-2 and EB-3 wait times are 7 to ten years long. Increasingly, Indians looking to migrate to America are beginning to look at strategies to get out of long queues.
EB-5 is a viable option for those with money. “There’s no requirement of education. There’s no requirement of language proficiency. As long as your money is clean, we can source it and you do have a true intent to migrate to the United States and be a resident then that’s the way to go,” asserts Kapuria. Most importantly, there is no backlog for India. The processing time from initial application to green card is roughly around 24 to 30 months.
That’s not the case with the Chinese EB-5 investor, who might have to wait as long as 7 years to get a green card via the EB-5 process.
In India, Kapuria differentiates between investors from Mumbai and Delhi (tier 1) and those from Ahmedabad, Bangalore or Chandigarh (tier 2). Investors from tier 2 cities tend to focus on direct EB-5s and are wary of Regional Center investments. These investors typically say “well, we understand the Regional Center model, but we’re not as convinced yet. We actually are looking at EB-5s as an investment strategy, first, and then as an immigration strategy,” Kapuria explained.
Not so with the Delhi or Mumbai investor or the Chinese investor. Kapuria indicated that 92% of Chinese investors go towards the regional center model, and like the Chinese, investors in Delhi, for example, are less focused on control and more willing to frame their investment strategy in the form of larger, glitzier and more sustainable projects, as within the Regional Center model, with an eye to getting the immigration advantage. “So, the immigration benefit comes first before the so-called security and return on investment,” opined Kapuria.
Indian investors thus far are more attracted by the smaller investment amount of $500k in areas of high unemployment. 93 to 94% of all deals from India are in TEA areas, according to Kapuria.
But, just as India is beginning to position itself as a critical player in the EB-5 visa scenario, the United States is on the verge of re-evaluating this particular immigration route. December 8, 2017 is the next deadline by which Congress will decide its fate.
It is unlikely that the visa will be eliminated, even though there are a few short-sighted Senators on both sides of the party line (Senators Dianne Feinstein (D-Calif) and Charles Grassley (R-Iowa)), who question its import, citing the advantage that the wealthy have as an inherent flaw of an immigration strategy that is full of flaws. But here’s the argument for EB-5s: there is a cap of 10,000 every year (which includes immediate family of investors) on EB-5s. Compare that to the 85,000 per year limit on H-1Bs. Since 2008, the United States has received $18.4 billion of direct investment because of the EB-5 program. And the final clincher: each investor translates to ten jobs, and that’s a very powerful incentive to keep it going.
Jaya Padmanabhan was the editor of India Currents from 2012-16. She is the author of the collection of short stories,Transactions of Belonging.