Brexit and Its Impact on India

Brexit

·        Referendum held in UK voted in favor of Brexit. But when we look at a region wise analysis, Scotland and North Ireland voted to remain in EU.

·        What will happen? Disintegration of UK in order?

·        Why people voted for Brexit? Recession, nationalism ignited, anti immigration attitude, cultural identity sought to be retained.

·        Experts see it as a vote of working class against market forces.

·        Various analysis, point out that the younger generation wanted to remain in EU (Because of job opportunities in EU as a whole being open to them due to membership of EU)

·        Immediate Impacts: Pound has already fallen, stock market crashed, PM has resigned, US has expressed disappointment, global ramifications.

·        Other Implications: lose huge market of EU.

·        Options for UK after Brexit

·        To adopt Norwegian Model (access to EU market despite non member), though it will have separate costs (it requires contribution to EU budgets etc.)

·        FTA with EU (but it will not cover financial services, competition)

Brexit impact on India

·        EU countries will start imposing tariffs on British products, making it far less attractive for Indian businesses – like Tata Motors – to have a manufacturing base in the U.K.

·        oil prices immediately declined, though it is a short term consequence

·        EU is regarded as a measure by Europe to discourage non white migration, so this is perceived as beneficial for Indian migrants

·        British pound collapsed. This is also likely to result in an increase in Indian students choosing the UK as a destination for higher education as this will make studying there significantly cheaper. Also, a surge in leisure tourism to Britain is expected, as it will become significantly cheaper.

·        The jobs for Indians already there will increase as citizens from EU there will not have any undue advantage

·        There will be some modification and moderation's in the  proposed India-EU Free Trade Agreement (FTA).

Recently, there have been reports of a significant number of people in UK regretting voting in favor of Brexit. Let us wait and watch how things pan out in the future.