Repercussions of Brexit on Indian Economy

            The people of United Kingdom have decided to leave the European Union. The stock markets all over the globe are seeing tremendous volatility. The President of the European Union have called for a quicker end to the separation of UK from them so that it can put an end to some uncertainties. Meanwhile, David Cameron has offered his resignation.

            We, today are living in an era of globalisation where any major event happening in any part of the world can have effects locally. The United Kingdom leaving European Union is one of the biggest changes in the politics of Europe. After the results of the poll were announced Sensex fell by over 600 points and the Indian currency was also under pressure after pounds fell more than 10% against the US dollar. Since then, there has been a lot of positives happening in India though. The Indian Meteorological Department has forecasted good monsoons this year, the Central government has announced the 7^th Pay Commission for their employees and ‘Make in India’ has become the most significant, relevant initiative of the government. But how will Brexit affect Indian economy both short term and in long term?

            The Brexit as of now will not have any sort term effects on trade relations with United Kingdom and the EU. Trade will go on as usual but companies would have started thinking about the effects of the poll result. Those companies which had their headquarters at London for their European operations have to search for another place in Europe.  Companies having large exposures or good volumes of trade with UK from India would like the UK to produce a trade friendly agreement with India. Indian economy would also like to see the GBP strengthening so that exports are not affected. The Government of India would have to put in some separate discussions with the UK for getting new trade agreements in place.

            And then we have companies like Tata motors which have their manufacturing plant for JLR in England. After Brexit, the card which are being manufactured in UK and sold in Europe could be taxed. This could affect the profitability of the company which is also having its own separate problems like union employee strikes.

            India has always had a good relationship with the United Kingdom and the time has come for the nations to come together in this time of uncertainty. Indian economy is poised to grow rapidly in the next decade and the United Kingdom would certainly be wanting to be a part of the growth as its own economy has seen stagnant growth for the past few years. UK companies would like to come to India to market their products. This has opened up a good opportunity for India and UK to build a new partnership and take both countries forward.