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demanding.
If Britain exits the EU, it will not be as attractive a destination for Indian FDI as
before. Having said that, Britain would not want to lose out on capital coming in
from India. Thus, one can expect Britain to try extra hard to woo Indian
companies to invest there by providing much bigger incentives in terms of
tax breaks, lesser regulation and other financial incentives. Further, if Britain
is leaving the EU due to the latter's complex bureaucratic regulatory structure,
Indian companies can expect a deregulated and freer market in Britain.
If Britain exits the EU, India will lose its gateway to Europe. This might force India
to forge ties with another country within the EU, which would be a good result
in the long run. India is already trying to build trade negotiations with Netherlands,
France, Germany, and others, albeit in a small way. Netherlands is India's top FDI
destination as of now. A Brexit could force India to build trading partnership
with other EU nations in order to access the large EU market.
"Consequently, a negative implication of Brexit is that Indian IT companies
may need to establish separate headquarters/operations for EU, leading to
disinvestment from the UK and diversion of activity from the UK to EU," it
said.
In the longer run, Brexit could help strengthen India-UK economic relationship as the
UK seeks to compensate for loss of preferential access to EU markets. "India's focus
on innovation, entrepreneurship and high-end work renders it a very attractive
destination from a talent standpoint and equally in terms of market access. This
could work to the benefit of the IT sector in India since the UK currently
accounts for about 17 per cent of India's IT exports worldwide".
Additionally, with the UK less dependent on intra-EU immigration into the UK, it
could become more open to high-skilled immigration from other non-EU
countries including India, it added. However, in case Britain decides to stay a
part of the EU, the IT industry would need to contend with easy intra-EU migration
of skilled workers from India into the UK, since it may continue to be dealt with as
an immigration issue and not a trade issue.
"In this scenario, in spite of a felt need for skilled workers from overseas, including
India, such immigration may remain a lower priority below intra EU and political
asylum linked immigration, thereby adversely impacting the IT industry in India,"
Nasscom said.
Consequently, it is important for the UK government to take note of the views of the
IT industry as the details of the deal are worked out, it added. (source:
http://www.firstpost.com/business/brexit-to-impact-indian-it-sector-in-short-termnasscom-2846626.html)
Britains exit from the EU probably wont have any significant impact on this, said
Biswajit Dhar, a professor of economics at the Jawaharlal Nehru University (JNU).
Dhar, a former consultant to the Indian governments planning commission
explained that two-way trade between India and the UK has been fairly
stable since the end of the last decade. This sharply contrasts with Indias total
trade with EU members, which has been declining during the same period.
It may, thus, be argued that the historical relationship between the two
countries still plays itself out in the realm of trade, he added.
A Brexit-UK will have far greater latitude to negotiate with India as it will
be free from the vast set of rules that come with EU membership, Soumya
Kanti Ghosh, chief economic adviser to the State Bank of India, the countrys
biggest lender, said in a report in May. UKs investment and expertise in cyber
security, its military technology are still competitive, and can become the point of
convergence under Make in India.
With or without a Brexit, it would be in Europe's interest to develop India as a
strong trade and strategic partner. Brexit would surely accelerate this process.
Europe needs to counterbalance United States and China geopolitically and would
also need to hedge against a slowing China for its economic interests. For this,
Europe would be looking at the fastest-growing major economy in the world and
would need to quickly resolve the pending trade issues with India in order to
develop a lasting relationship.