Family Businesses Power 79% of GDP, But Only 7% of Heirs Willing to Step In

Family businesses in India continue to grow, contributing around 79% of the country's GDP. However, an interesting trend has emerged in the segment lately. While business owners remain confident in the next generation’s ability to manage both the business and family wealth, not many are willing to take over the reins.

According to a report by HSBC Global Private Banking, titled ‘Family-owned businesses in Asia: Harmony through succession planning’, Indian family-owned business owners are optimistic about the next generation, however, only 7% of Indian respondents felt a sense of obligation to take on the business.

Although 88% of Indian entrepreneurs have confidence in the next generation’s ability to manage family wealth, 45% don’t actually expect their children to take over the family business. This includes more than half of first-generation entrepreneurs and over a third of those from established business families.

“India’s family-owned businesses are balancing legacy preservation with modernity. 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," said Sandeep Batra, head, international wealth and premier banking, HSBC India.

Still, many Indian business owners continue to keep succession in the family. According to the report, 79% plan to hand over their businesses to family members, very much in line with global numbers like 77% in the UK and 76% in Switzerland. Interestingly, younger Indian entrepreneurs feel highly trusted by their elders.

"Indian second- and third-generation entrepreneurs feel a strong sense of trust from their predecessors, with 95% reporting they felt trusted when taking over the business—significantly higher than the global average of 81%," the report said.

In 2024, there were 334 billionaires in the country, a 29% jump from the year before, according to Hurun data. Around 70% of them are expected to pass on a total of $1.5 trillion to the next generation. This is more than one-third of India’s GDP.