Brexit : UK European Referendum Polls and its Effect on Indian Business

‘Brexit’ is the most talked worldwide issue after 2008’s financial crash in the finance world. Today, 23 June 2016 Brexit Poll or UK European Referendum Polls to be held in Britain on staying or leaving the European Union.

British Prime Minister David Cameron, several veteran politicians, businessmen and film to sports stars debated their respective ideas of Brexit while Indian market is going through unstable phase and treads alert ahead of the outcome of Brexit Poll.

If Brexit will happen then it will be complex worries for policy makers’ days after the RBI Governor, Raghuram Rajan, announced his decision to not seek a second term.

UK European Referendum Polls
UK European Referendum Polls

The overall impact of Brexit in real terms is likely to be broadly muted. Two potential losses, if a Brexit were to happen, could be manufacturing companies that have set up base in the UK while having a substantial exposure to mainland Europe, and firms in the services sector, especially information technology firms.

The top Indian Companies operating in the UK are Bharti Airtel, HCL Technologies, Emcure Pharma, Apollo Tyres and Wockhardt. Apart from HCL, India’s other top five IT firms too have a presence in the UK. The biggest fear is that Britain’s leaving the Union could have a pouring effect, including more pullouts.

Before a loud and raucous crowd of some 6,000 people, and a large BBC audience Tuesday night, former London Mayor Boris Johnson went on the attack, downplaying suggestions that breaking away from the 28-nation EU bloc would mean trade tariffs for British exports.

United Kingdom is the third largest private investor in India with cumulative FDI equity investments of $ 22.7 billion from April 2000 to December 2015. While India is the third largest investor in terms of number of projects into the UK. The number of Indian companies in the UK, growing at more than 10%, has nearly doubled from 36 to 62 firms in a year. The combined turnover of these businesses has increased from £ 22 billion in 2014 to £ 26 billion in 2015.

It is difficult to draw an empirical impact on India’s real economy. But if the Leave camp wins, it is likely that the UK will seek trade agreements with non-EU partners, including India”.

From a companies’ viewpoint, if the Brexit vote goes through, Indian businesses that are focused on purely tapping the UK’s domestic markets are unlikely to face many challenges. An impending risk is that of an imposition of trade barriers, scrapping of preferential rates, and higher taxes between the UK and rest of the EU, which might pose a hurdle for foreign companies to invest in the UK.

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