The Brexit votes will be conducted in the United Kingdom on June 23, where the citizens, including a nearly 3 million diaspora population of Indian origin residing in the UK, will voice their opinion whether the country should ‘Remain’ or ‘Exit’ Europe. This tight race will also have a much scrutinised impact on Indian market.
The British registered voters will cast their votes as a reflection to their opinion to ‘exit’ or ‘remain’ in the European Union on June 23. The British ‘leavers’ are in favour of ‘Brexit’ while the ‘remainers’ want to stay a part of this Union.
The Brexit supporters believe that after leaving the EU, UK will be free to enter into a free trade agreement with any country including India, China and America, while currently, Britain operates with single market mechanism under the EU. The ‘leavers’ argue that independent Britain will be free of EU regulations, control its borders, restrict immigration, save the money it pays into the EU budget and reform policies and regime for the movement of people.
While the ‘remainers’ oppose the exit as according to them, there is a risk of losing access to the huge EU market for its exports, but also of loosing concrete advantages like cheap prices in supermarkets, cheap flights to Europe and lower phone charges while travelling.
British Prime Minister, David Cameron, wishes that UK remains within the EU, while former London Mayor, MP and a member of the Conservative Party Boris Johnson, is campaigning for Britain’s exit.
The Labour Party in Britain has opposing views too. Labour chief Jeremy Corbyn supports the ‘remain’ with the EU, but a group calling itself Lexit (Left for Exit) is campaigning for leaving. Whereas Scottish National Party (SNP) votes to ‘remain’, U.K. Independence Party (UKIP) wants an exit.
Significance of the Indian origin voters
People who can vote in the parliamentary elections are eligible to vote in the referendum as well.
This includes British and Irish citizens above 18 and residents of the UK, Maltese and Cypriots over 18, citizens born in commonwealth countries, who are over 18 and are UK residents, British citizens who have lived overseas for less than 15 years, Irish citizens born in Northern Ireland and registered to vote there in the last 15 years, commonwealth citizens in Gibraltar over 18 and members of the house of lords in Gibraltar.
Amongst these voters, nearly three million diaspora population of Indian origin residing in UK will have a major number to play for the Brexit votes, since the polls predict a tight result.
Consequences for the Indian market
Nearly 13 pc of India’s total trade is with Europe and approximately 800 Indian companies are operating in the UK and Britain’s exit from EU may affect their investments. The Indian stock markets have already been jittery in the last days, waiting for a result that could generate a lot of volatility, in stock but also currency markets. The Reserve Bank of India, like other big central banks, is also following this issue very closely.
British PM David Cameron addressed his people and requested them to vote against Brexit as according to him Britain could do more with India but cannot forget the EU market.
“We sell more in services today to Luxembourg than we do to the whole of India. Of course, we need to do better with India; we need a trade deal with India. But the idea that we should cut ourselves off from our main market, I think is economic madness. We need to work to succeed in our main market and then open up the other markets,” he said.
The other way around, Indian companies would also be affected by a Brexit, depending also on the sector they are in. “If the Brexit vote goes through, Indian businesses that tap the UK market are unlikely to face many challenges. However, IT and pharma companies, which intend to utilise the UK as a base to gain access to other European markets will take a hard knock,” said Dhruv Desai, director and COO, Tradebulls.
Big Indian companies like Tata Steel, Tata Motors, Bharti Airtel, HCL Technologies, Emcure Pharma, Apollo Tyres, Mahindra, Bharat Forge, Kitex Garments, Zodiac Clothing, KPR Mill, Wockhardt, Cipla, Torrent Pharma, IPCA Labs and Cummins India have a considerable exposure in the European markets and British exit from the EU would result in considerable uncertainty for Indian businesses in the UK.
India views Britain as a gateway to the EU
India’s external affairs minister Sushma Swaraj said that India prefers Britain to stay within the EU. “We have always held that, and articulated too in the past, that Britain is the gateway to the European Union”, she said.
However, some Indian business circles see also different opportunities materialising in case of a Brexit. According to a State Bank of India (SBI) report, “the referendum will have geopolitical implications and will affect the relation of the rest of the world with Europe. But, our take is that though such an exit brings up a lot of uncertainty within Europe, it definitely opens up opportunities for India”.