The news of Britain’s exit from the European Union took the world by surprise. With all the financial and political repercussions of Brexit continuing to reverberate around the world, questions still continue over its impact on the global economy. We try to answer one such question today: Brexit impact on India 2019.
By now, businesses should have ideally started preparing for the United Kingdom’s exit from the European Union. Instead, they are left playing a guessing game as to what the ultimate outcome will be. Indian businesses operating in the EU will be pondering their fate as well. The guessing game took a new twist on January 15, 2019 after the British Parliament rejected the government’s Brexit plan with 432 votes against compared to 202 votes for the plan. Such a considerable margin of defeat suggests that the current plan is dead in the water.
Effects on the Indian economy
The fact that Brexit is expected to have implications for businesses is known, but they are far from clear. Any substantial change across the globe, be it political or economic, is bound to have an impact as India is one of the major Foreign Direct Investment (FDI) sources for the UK because Britain has always provided an access to the EU, many businesses have been established their offices in Britain so that they are able to avail certain benefits and continue to subsist as a part of the EU. However, with this Brexit, this benefit will be taken away and may result in companies relocating their business to other places.
Although through the Brexit India has a chance to reframe the legal terms of trade with the UK and the EU, at a multilateral level through Free Trade Agreements.
Automobile industries, auto components manufacturers are also likely to be affected adversely as the EU economy is expected to slow down which will result in a drop in auto sales. Even sectors like the IT and pharma are likely to suffer due to the EU-UK uncertainty, but this may be partially offset by dollar appreciation in the immediate term. How the disintegration affects the ability of Indian companies to export on the same terms will determine its eventual impact. Analysts are also forecasting increased volatility in the currency markets.
A positive impact as a result of the Brexit on the Indian economy may not show up right away as the process of designing and implementing the policies may take a while.
Also, anticipations are that the immigration rules for Indians into the UK might take on a relatively favorable stance which gives an opportunity to the Indian companies in the UK to expand their workforce, plans, and operations.
While the politics of Brexit play out among political parties, investors around the world, including India will be on tenterhooks till the final moment.
Effect on the Education sector and Travel
UK is considered to be one of the primary countries in terms of pursuing education specially for Indians. The cost of studying in the UK will be much affordable now for Indian students as there expected a fall in the pound value. Hence this would be a good opportunity for students looking forward to studying in the UK. Besides, UK universities also do offer various scholarship schemes in order to ease out the financial burden on international students which will probably result in an increase in the job opportunities in the UK.
Again, the expected or prediction of reduction in the value of the pound will automatically reduce the travelling cost to the UK and make it a good travel destination.
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To sum up, Brexit will not have much impact on the Indian economy primarily or directly as India is run by domestic demand and supply; although a few effects, both positive and negative can be envisaged in some industries individually. To keep an eye on such updates on specific industries and how you can capitalize on the right opportunities in the UK over the course of Brexit, drop your email below and we shall make sure you receive all the relevant updates on Brexit impact on India 2019.
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