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India's Silent Prayer On The Brexit Vote

14/06/2016 8:28 AM IST | Updated 15/07/2016 8:27 AM IST
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Ahead of the referendum on 23 June, 81 British-Indian business leaders have expressed support for Britain's membership in the European Union. They say that Britain exiting the EU would be a "double whammy", hitting not only UK businesses but also impacting FDIs from countries like India.

"Brexit" is an informal term created by the UK media to refer to the EU referendum on whether Britain should exit the European Union or not. I am assuming a vote to leave will lead to an agreement between the EU and the UK on new policies about trade and market access, for the next few decades. This will have to be decided upon in a time-constrained and intensive period of just two years.

India is now the third-biggest provider of foreign direct investment into the UK, according to UK Trade and Investment. Indian companies employ 110,000 individuals in the UK.

In an open letter, 81 signatories who represent companies which range from multi-million-pound businesses to small and medium enterprises (SMEs) and employ thousands of people across the UK, warned that a vote to leave the EU would create "significant uncertainty" and put jobs and business investment at risk. The signatories said they believe the UK's membership of the EU helps "strengthen the British economy".

I think the UK holds the largest financial centre in the European Union. The City of London is famous in the EU and has attracted a wide range of global banks and other financial services. Brexit would inadvertently impact the financial services industry, the extent of which will depend on the arrangements agreed upon during the transition period and the specifics of the trade agreement. Several key regulatory and legal issues will need to be considered for a firm to assess their potential impact -- for example, any banking firms that use the passport system may have to change their entire business models and operational structures.

The Pro-Brexit rhetoric is that an exit from the EU would allow the UK to regain autonomy and focus on its own local troubles. This, it is argued, could help alleviate many problems associated with immigration and other issues while saving millions of pounds. I would think that member benefits of the EU and access to the common market outweigh many of the problems that come with membership.

Keeping all this in mind let's bring in India, which has become an increasingly important investor for Britain. It is now the third-biggest provider of foreign direct investment into the UK, according to UK Trade and Investment. Indian companies employ 110,000 individuals in the UK, figures published by the Indian government show.

Indian IT outsourcing companies have also been expanding in Britain... Part of their strategy of growing in the UK is to reach the rest of Europe.

Tata Motors, which owns Jaguar Land Rover (JLR), the pharmaceuticals companies Wockhardt and Cipla, and the telecommunications firm Bharti Airtel, are some of the Indian companies that have a major presence in the UK.

Indian IT outsourcing companies have also been expanding in Britain as they look beyond the United States to try to grow their revenues. Part of their strategy of growing in the UK is to reach the rest of Europe.

The Vote Leave rhetoric continues to state that an EU membership is now a threat to London's affluence. The idea that London would flourish post Brexit goes against the many warnings from US investment banks and the Bank of England. Many financial establishments have warned that Brexit would drain London of its wealth, topple the pound sterling, undermine the world's fifth-largest economy and push traders to move their businesses to other financial centres in the world.

Membership of the EU provides British business much-needed access to the single market. Brexit could potentially increase UK-EU trade costs as well as exclude the UK from any deeper integration (such as the Transatlantic Trade and Investment Partnership with the US).

London has been a popular investment destination for quite a few countries; half of the investments in the UK come from the EU -- but a great chunk of investment trickles down from China, the US and India.

I firmly believe that leaving the EU will have an adverse impact on investment and movement of professionals from India to the UK.

India has continued to establish better relations with other EU members. There was a huge volume of FDI outflow from India into the Netherlands. France, Germany and India have been in talks for better cooperation in sectors such as innovation and investments in the respective countries.

Britain leaving the EU would lead to considerable uncertainty for businesses, especially investment businesses.

The UK has claimed that there would be fairer migration laws for non-EU citizens but Britain has created its identity by having a diverse workforce. The UK is the bridge to the rest of Europe as well as a valued economic partner, and thus I firmly believe that leaving the EU will have an adverse impact on investment and movement of professionals from India to the UK.

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