Brexit And India

Article 50 of Lisbon Treaty triggered by Britain on 30 March 2017. Let's look at how things stand now, the impact United Kingdom, India and the World. (12 minutes read)

Article 50 triggered as the parliament of Britain starts the exit process; British government on 30 March 2017 notified the European Union President Donald Tusk formally of its intention to leave the union. Article 50 is a plan for any country that wished to exit the European Union in accordance with its own constitutional requirements. Let us learn the impact of #BREXIT on the United Kingdom and India. Before we head to the repercussions of the Brexit, let’s have a brief look at the chain of events that led to the ignition of possibly “A Vote of the Century”.

Political and economic union of European countries, European Union currently has 28 member states or countries including the United Kingdom. Started in January 1958 as European Economic Community with just 6 member states; Germany, Italy, Luxemburg, Belgium, France and Netherlands. The United Kingdom officially joined European Economic Community in the year 1973 and in the year 1986, the United Kingdom assumed the presidency of the European Economic Community. In the year 1992, European Economic Community officially changed its name to the European Union and adopted a common currency EURO barring few countries including the United Kingdom. By the year 2013, there were 28 member countries and many more countries were striving to join the European Union.

Meanwhile in the United Kingdom, in the year 2013, with the rising popularity of UK Independent Party and its focus on European Unions’ high membership fees, its migration policies led former Prime Minister of the United Kingdom David Cameron to hold a referendum.  He won the elections held in the year 2014 and in order to fulfil his promise; in February 2016 he set the date of the referendum that was to be held on June 23, 2016.

1. Impact on the United Kingdom

A 4 nation strong economy takes its breath from one place, London. London forms a major part of the financial system of the European Union and the world. With an earlier policy of setting up the base of operations in one country within the European Union and working across, with Brexit, the banks will now have to set up their base in Europe as well, maybe Frankfurt or Paris which will lead to thousands of jobs relocation. This phenomenon will not just be witnessed by the financial institutions but all the multinational corporations that had set up their base of operations in London and operated throughout the Europe. Now, they will have to set up another base of operation among the cities of the European Union. This means tens of thousands of jobs being relocated. There remains a sense of confusion for those who will be entering the job market in the next 5 years. Brexit may potentially lead to another referendum help by the Scottish government as it prefers to stay with the European Union, creating more uncertainty, leaving British people more divided as ever.

There remains a sense of confusion for those who will be entering the job market in the next 5 years. Brexit may potentially lead to another referendum help by the Scottish government as it prefers to stay with the European Union, creating more uncertainty, leaving British people more divided as ever.

2. Sitting almost 7000 kilometres away, how does it impact India?

India is touted as one of the largest source of Foreign Direct Investment for the United Kingdom. There are about 1000 Indian companies in the United Kingdom that employ about 110,000 people generating almost $ 32 Billion collectively. India has opened up almost all industry sectors for foreign direct investment barring a small negative list. India has been able to strengthen its position on the investment radar and the growth prospects in the country remain strong. India is expected to get continued attention from the investors including investments from the UK. Largest Indian company TATA industries that include TATA steel, Jaguar Land Rover is going to have a major impact post-Brexit. Massive investments made by the TATA in the United Kingdom was not aimed not merely at the British market but the single market of European Union. Therefore, TATA will now have to rethink its strategy by downsizing in the United Kingdom and invest in the Europe.

India has opened up almost all industry sectors for foreign direct investment barring a small negative list. India has been able to strengthen its position on the investment radar and the growth prospects in the country remain strong. India is expected to get continued attention from the investors including investments from the UK.

Largest Indian company TATA industries that include TATA steel, Jaguar Land Rover is going to have a major impact post-Brexit. Massive investments made by the TATA in the United Kingdom was not aimed not merely at the British market but the single market of European Union. Therefore, TATA will now have to rethink its strategy by downsizing in the United Kingdom and invest in the Europe.

The Brexit process has become a defining moment in the context of global economy. Post exit, the real battle will begin on how major and developing economies of the world will work collaboratively. It remains to be seen how things pan out.

 

 

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