Impact of brexit on indian economy essay
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What is Brexit?
Brexit is the term coined for Britain’s referendum to exit the European union. The referendum is due for voting on 23rd June 2016. Momentum is growing behind the EU exit campaign, which wants to end central control by Brussels and give Britain the freedom to manage its own affairs.
Prime Minister David Cameron announced the date after he secured a deal with other European leaders at a crunch summit in February. The Government decided to hold the vote before the start of the summer migration crisis, which could stir up more Eurosceptic feeling among the British public.
British, Irish and Commonwealth citizens (except citizens of Gibraltor) who live in the UK, along with Britons who have lived abroad for less than 15 years, will be able to vote. The registration for the voting has ended on 9th June 2016 at 11:59 Pm (BST). As on 7th June the count of registration stood at 525,000. Update: The count is far higher now at over 45 million. Thanks to watchful commenters here!
Impact on India:
UK has always acted as a gate pass for Indian companies to access the European companies, its more because of the access to financial markets in London and ease of doing business with Europe, from UK. Why will anyone want to set up office in Europe and learn the local language to get access to the markets, when the same can be done sitting in London?
India has positive trade surplus of $3.64 billion in terms of bilateral trade with Britain. The total trade stood at $14.02 billion in FY16, out of which $8.83 billion was in exports and $5.19 was in imports.
For the month of April 2016 the exports to Britain stood at 17.66%(USA 17.80%) of the total exports. In terms of imports, India imports only 1.45% of its net imports from UK.
If we look at exports from India to UK, the major exports are textiles and clothing, followed by machinery and auto ancillaries. India’s major exports in terms of pharma are US, UK followed by Europe.
India Export UK FY16
So on the event of Brexit, the pound rate might fall against the dollar and thus, the rupee. And the companies which have income from UK and Europe are going to be hit, at least for shorter term. Companies like Motherson Sumi which have their 85% of income coming from Europe are keeping their fingers crossed on the referendum.
Indian pharma industry which has more exposure towards Europe, will also be affected.
India Import from UK FY16
On the other hand the imports from UK will be getting cheaper on the event of Brexit, mainly rough uncut diamonds, spirits etc. Those Single Malts may finally be affordable!
Brexit is the term coined for Britain’s referendum to exit the European union. The referendum is due for voting on 23rd June 2016. Momentum is growing behind the EU exit campaign, which wants to end central control by Brussels and give Britain the freedom to manage its own affairs.
Prime Minister David Cameron announced the date after he secured a deal with other European leaders at a crunch summit in February. The Government decided to hold the vote before the start of the summer migration crisis, which could stir up more Eurosceptic feeling among the British public.
British, Irish and Commonwealth citizens (except citizens of Gibraltor) who live in the UK, along with Britons who have lived abroad for less than 15 years, will be able to vote. The registration for the voting has ended on 9th June 2016 at 11:59 Pm (BST). As on 7th June the count of registration stood at 525,000. Update: The count is far higher now at over 45 million. Thanks to watchful commenters here!
Impact on India:
UK has always acted as a gate pass for Indian companies to access the European companies, its more because of the access to financial markets in London and ease of doing business with Europe, from UK. Why will anyone want to set up office in Europe and learn the local language to get access to the markets, when the same can be done sitting in London?
India has positive trade surplus of $3.64 billion in terms of bilateral trade with Britain. The total trade stood at $14.02 billion in FY16, out of which $8.83 billion was in exports and $5.19 was in imports.
For the month of April 2016 the exports to Britain stood at 17.66%(USA 17.80%) of the total exports. In terms of imports, India imports only 1.45% of its net imports from UK.
If we look at exports from India to UK, the major exports are textiles and clothing, followed by machinery and auto ancillaries. India’s major exports in terms of pharma are US, UK followed by Europe.
India Export UK FY16
So on the event of Brexit, the pound rate might fall against the dollar and thus, the rupee. And the companies which have income from UK and Europe are going to be hit, at least for shorter term. Companies like Motherson Sumi which have their 85% of income coming from Europe are keeping their fingers crossed on the referendum.
Indian pharma industry which has more exposure towards Europe, will also be affected.
India Import from UK FY16
On the other hand the imports from UK will be getting cheaper on the event of Brexit, mainly rough uncut diamonds, spirits etc. Those Single Malts may finally be affordable!
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