Britain votes Leave: What it could mean for India3 min read
In a historic referendum vote, Great Britain voted to ‘Leave’ the European Union. Prime Minister David Cameron resigned while the British pound fell to a three decade low even as the result of the referendum vote was being declared. While most of the effects will be felt by European countries, it will also impact India given its historically close ties with Britain.
What it means for business?
There are over 800 Indian-owned businesses based in the UK. As per a UK government release, Indian companies invest more in the UK than in the rest of the EU countries combined. With a common language and similarities in the legal system thanks to India’s colonial past, the ease of doing business in Britain means it is an ideal springboard for companies looking to expand in Europe. Even PM Narendra Modi was in favour of Britain remaining within the EU calling the country “India’s gateway to Europe” in his recent visit.
After Great Britain voted to leave the EU, companies may have to find a different European city as their entry point into Europe. For instance, at present Tata can freely sell cars assembled in the UK across the rest of the countries in EU without tariffs. Following a Brexit, Tata may have to shift their assembly plant to another European city to cut costs. Tata-Motor owned Jaguar, for instance, is manufactured in the UK and is sold in 40 other European countries. The company could face a 1-billion pound loss by 2020 due to Brexit.
Economic experts agree that Brexit will lead to a period of economic insecurity. “Historically, India has had close economic and political ties with Britain. Indian companies have invested in Britain and vice versa. A Brexit will lead to a time of insecurity among Indian investors,” opined Britta Petersen, Senior Fellow ORF (and former South Asia Correspondent Financial Times Deutschland).
Will Indians migrating to Britain be affected?
Currently, immigrants from within the EU countries are free to work into the UK while immigrants from non-EU countries are selected based on a points-based system. If Britain votes to leave the EU, it could lead to a more equal selection process as the Brexit campaign has announced that the points-based system will apply to immigrants from EU countries as well. Net migration into the UK is currently at an all-time high 330,000 (as per 2015 figures) with EU nationals accounting for a sizeable 184,000.
However, a Brexit does not necessarily help Indians obtain visas in Britain. The Brexit government’s tough stance on immigration will likely curb overall immigration into the country. There was already a fall in the number of Indian students studying in British universities from 22,385 in 2012-13 to 18,320 in 2014-15 due to visa restrictions.
It is also unlikely that Britain will evict migrants and replace the large number of EU-nationals currently part of the workforce in the country. “There is a lot of crystal-ball gazing involved as it is not clear how things will play out. While on paper, immigrants will be illegal post-Brexit, they could still apply for a work visa,” added Ms. Petersen.
Great Britain is yet to officially leave the European Union since a referendum vote is not legally binding. Britain now enters a phase where it is preparing its exit from the European Union and there is a two-year time limit for the withdrawal negotiations. Indian officials remained confident that they are sufficiently prepared for the impending Brexit. The effects and their impacts, however, are yet to be seen.
Edited by Anirban Paul