Impact of Brexit on India: Do we really need to worry?

2. • Scenario 1: EEA, formed in 1994, serves as a bloc that gives
non-members of the EU access to the single market
Implications for India: Indian businesses are expected to remain
largely unaffected
• Scenario 2: Does not come under EU but has a sequence of
bilateral treaties governing their relationship
Implications for India: Access to single market remains but with
some restrictions
• Scenario 3: The UK's relations with EU and rest of the world to be
governed by WTO rules
Implications for India: India-EU trade through the UK could be
hampered

3. Education Sector:
• EU students studying in UK: Might be charged with international
students rate or not eligible for EU funding and loans.
• For international students outside EU:
1. No direct effect on tuition fee but if pound remains weak
compared to student’s home currency, students will be better off.
2. Universities might increase the tuition fee to make up for deficit.
• Indian students in UK:
Short term- fee will reduce due to currency devaluation
Long term-overall cost will increase because of uncertain prospects
for finding work opportunities.

4. Immigration and Employment:
• With Brexit, the UK will no longer be obliged to offer quota based jobs to the
citizens of the EU countries. This will open up the market for skilled and semi
skilled labour. Overall, there will be employment creation for Indian and
Commonwealth country migrants, including temporary workers, in the UK.
• As of May 2016, net migration in Britain rose to its second highest level ever of
1.84 lakh immigrants arriving from EU. This space will now be hotly contested
by people from all over, including India.
• India sees the UK as a “springboard” or “gateway” into Europe. Many Indian
companies are listed on the London Stock Exchange and many have European
headquarters in London. (According to Indian government numbers, there are
800 Indian companies in Britain). Brexit will take away this advantage.

5. • Work-related visa restrictions have already resulted in a fall in the
number of Indian students in the UK. Following Brexit, the number
of Indian students applying to UK universities and colleges might
reduce further. Sceptics also fear that visitation rights of relatives
who have families in UK might also be affected. Also, those applying
for visas in Britain may face a hard time. With Brexit, the
government’s stance on immigration will likely curb overall
immigration into the country.

6. • As per Fitch Ratings Brexit will create uncertainty for several
automotive manufacturers
• Prediction of falling sales and rising costs being the most likely
outcomes for automaker
• Importer Ford and Volkswagen Group, are at risk from the pound's
fall in value against the euro.
• Japanese automakers' operating profit likely to fall by 15 percent as
value of the yen rose against European currencies and the dollar
after Brexit .

7. IMPACT ON INDIAN MARKET
• Key players in the Indian automotive sectors, including component
suppliers, have made significant investments in UK
• Impact on the Indian automotive part manufacture as many Indian
auto parts manufacture like Bharat Forge & Motherson Sumi have
major part of their revenue coming from their UK based subsidiary

8. TATA (JAGUAR)
• Tata’s Jaguar Land Rover manufactured at UK enjoyed 10% saving in
the form of savings in import duty
• UK’s membership of the EU, which waived off the import-export
tariff barrier between member nations.
• Result of Brexit is that Jaguar Land Rover, for which European
markets account for one-fourth of its sales, is set to lose a
whopping 1 billion pounds
SUZUKI
• Suzuki sells around half of the total cars it manufactures in India
through its Indian subsidiary Maruti Suzuki
• currency fluctuation created by Brexit has hampered Suzuki’s
operational profits

9. Impact on UK’s FDI in India
 Fall in value of pound might decrease in FDI investments in
India (immediate impact).
 A Bilateral Trade agreement might result in increase in
investments in India.
 Britain on a lookout for partner countries after the exit, would
find India a bright spot in the slowing world economy
Over all FDI investments in in India likely to increase
 European market is unstable.
 Liberal FDI policies of India.

10. • Indian companies are the third largest source of FDI in UK
• Indian firms have a Combined turn over rate of 26 billion pounds
• India’s FDI investment to UK expected decrease after UK’s exit from European Union
• UK no longer a good base for companies trying to enter the European market
 Trade tariffs to be imposed on import and export of goods from EU to UK
 Trade negotiations have to be done on a country by country basis
 Uncertainty about immigration laws for EU nationals
 Major players have already announced huge decrease in expected profits (
Jaguar is expecting 1 billion pound loss by 2020).
Indian Investors moving to other stable markets like Netherlands, France etc.

11. • Europe is the second largest market for the Indian IT-BPM industry,
constituting almost 30 per cent of the industry’s export revenue.
• UK contributed 17 per cent of the total income for the Indian IT
Industry in the FY15-FY16 (Total was $110 Bn).
• Many India IT companies use Britain as the hub of their operations
in Europe.

12. Europe
30%
America
62%
Middle East
6%
Others
2%
Europe
America
Middle East
Others

13. • Decline in the value of the British Pound, which would render many
existing contracts losing propositions unless they are renegotiated.
• Decisions regarding large projects could get postponed till clarity on
the terms of exit crystallize.
• Furthermore, any negative impact on the British economy in terms
of slower growth or worse, could reduce opportunities for Indian
companies in UK.
• Skilled labor mobility across EU and UK would be impacted..

14. • Brexit could lead to strengthening of India-UK economic
relationship as UK seeks to compensate for loss of preferential
access to EU markets.
• A possible exit of Britain from Europe may increase the country’s
focus on being seen as an independent market with a renewed
focus to build scale and new markets.
• This could open up new opportunities for UK and India as well.

15. • Brexit may not impact India as adversely as it is made out to be after
all, In fact we may have more to gain more from it than lose from it.