Indian family businesses, which contribute around 79 per cent to the country’s gross domestic product (GDP), are witnessing a shift in trends related to family succession. While they continue to trust the next generation’s ability to manage family wealth, 45 per cent of them don’t expect their children to take over the family business. According to a survey report launched by HSBC Global Private Banking on Tuesday, this highlights a shift in the traditional approach to succession planning.
Moreover, not many among the new generation feel compelled to carry forward the family business. The survey noted that only 7 per cent of Indian respondents felt obligated to take on the family business when the business was passed on, reflecting a growing openness to exploring opportunities outside the family enterprise.
This sentiment was supported by strong feelings of encouragement within multi-generational families, with 83 per cent of respondents said that they felt empowered to pursue other interests when they first took over the business.
The survey having 1,882 business owners as respondents participated from 10 markets viz., France, Hong Kong, India, Mainland China, Singapore, Switzerland, Taiwan, the UAE, the UK and the US.
Despite the changing trend, the report noted that 79 per cent of Indian entrepreneurs still plan to pass their businesses to family members. This was aligned to global trends with per cent 77 per cent of entrepreneurs in the UK planning to have family members for succession and 76 per cent in Switzerland.
Speaking on succession planning, Sandeep Batra, Head, International Wealth and Premier Banking, HSBC India, said while there is trust in the next generation to uphold the values and culture of the family business, there is also a need for open communication and robust succession planning.
“This proactive approach not only strengthens family bonds but also safeguards the long-term sustainability of these businesses. By integrating sound financial advice into this process, families can optimize wealth management, mitigate risks, and strategically plan for growth, ensuring their legacy thrives across generations,” he said.
The shift assumes significance with India on the brink of a significant intergenerational wealth transfer. According to Hurun data, in 2024 India had 334 billionaires with the number rising 29 per cent year-on-year.
Importantly, close to 70 per cent of the list are on the cusp of a $1.5 trillion intergenerational wealth transfer that equates to more than one-third of India’s GDP. “This underscores the importance of robust succession planning to ensure the seamless transition of wealth and business leadership,” the report said.
Subscribe to Financial Express SME (FE Aspire) newsletter now: Your weekly dose of news, views, and updates from the world of micro, small, and medium enterprises