Britain has voted itself out of European Union, this sounds adverse signal for India and its corporates who have business exposure to UK. Though at present country’s strong macro-economic fundamentals will help it withstand the fallout, there is a need to realign strategies to stave off the negative impact on businesses. The United Kingdom voted to leave (Brexit) the European Union after 43 years in a historic referendum that saw 52 per cent of votes in favour of ‘Leave’. As Brexit will vitiate the already uneven and fragile global recovery, it will exert downward pressure on global commodity prices and India will benefit being a net commodity importer. London being a nerve centre for the global firms, a fear factor has gripped the entire financial world. There is uncertainty in the immediate term, anything can happen and as a credible economy, India has to be ready and be on top of the situation to stem the situation. As a key emerging market and the one which is being preferred by the global fund managers, India could witness wild fluctuations or large outflows in sync with an overall trend. That is something to watch for. Britain is on 12th rank in terms of India’s bilateral trade with individual countries. It is also among just seven in 25 top countries with which India enjoys a trade surplus. Britain is also the third largest investor in India after Mauritius and Singapore, with a cumulative inward flow of $22.56 billion between April 2000 and September 2015. And now with Britain’s exit from European Union, pound would become volatile which would increase risks for Indian businesses. There is also speculation that an exit from the EU could result in Britain tightening immigration further. Over the past years, immigration reform in the UK has already led to a steady drop in the number of Indian students enrolled in the UK. Around 18,000 Indian students are currently studying in UK universities and this number may fall if Brexit leads to tighter immigration norms. The other side of the story could be Britain becoming stronger economically which in one way is good for India.
