What is Brexit and How does it Affect India?

What is Brexit and How does it Affect India?

The world has been talking about a phenomenon known as Brexit for the past few months. This move is basically a referendum signed by Great Britain which separates it from the rest of the European Union.


Owing to this change, there have been many related aspects of the economy and policies of the country that have undergone a severe change, which also affects other nations like India. Let us find out more about Brexit and how it affects India.

  1. Brexit:
    In June this year, the people of Great Britain signed in favour of a historic referendum to separate from the European Union. This sent the global economy into shock.

  2. An ally:
    Traditionally, UK has been the closest ally of India. Indian companies have always used UK as a jumping point to serve the European market. Brexit therefore means the loss of an important ally in the EU.
    A large number of Indian companies have their bases in Britain as a way of accessing the lucrative European Market. They would now have to relocate to European countries, and need to spend to build infrastructure and staff. Further, India would have to deal with a more aggressive leadership in UK.

  3. Investment: India is one of the biggest Foreign Direct Investors in the British economy which is a way of forging the cultural and trade links between the two countries. With this link, India was able to foresee a future where it could open its factories and markets in places within the rest of Europe. But that support will now affected because of the Brexit.

  4. Currency and Markets: The knee jerk reaction to the Brexit has been felt the world over, by various allies of Britain including India. This move has led to a sudden sharp decline in the Great British Pound’s conversion with respect to all Currencies including Indian Rupees. From INR 100 to INR 82, the GBP to INR Exchange rate has fallen by almost 20 percent.

  5. Bureaucratic and Global Policies: Many professionals and students who had entered Great Britain on a European Union based visa will now have to leave the country unceremoniously.

In the long run, however, the Brexit might not be that bad a thing. It would be in Europe’s interest to develop ties with India as a trade partner due to its vast demography. Also as the Chinese economy slows down, Europe would be keen to establish ties with a fast-growing economy like India who could be a strategic trade partner.



Source:
EU Referendum: Brexit may create uncertainty for Indian firms with UK exposure, experts say
Brexit: All you need to know about the India impact of the referendum
 

30 Oct, 2016
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