THE Confederation of Indian Industry (CII) has restated its commitment to building trade between India and the UK, in spite of the Brexit referendum vote to leave the EU.
Commenting on the outcome of the Brexit referendum in the UK, Dr Naushad Forbes, President CII, said, “The India-UK relationship is an important one, within or without the EU. CII reaffirms its commitment towards strengthening bilateral trade and investment ties and enhancing business linkages.”
He however noted that many Indian companies view the UK as a gateway to Europe. According to a recent study by CII, Indian companies continue to play a major part in the vibrancy of the UK economy.
Last year saw investments from India rise by 65 per cent, making it the third largest source of FDI in the UK. In fact, India invests more in the UK than in the rest of Europe combined.
Since access to European markets is one of the key drivers for Indian companies investing in the UK, Dr Forbes emphasised that with the UK voting to leave the EU, Indian companies will re-engineer their European strategy. This should not be an issue. India will not be affected due to Brexit if we look at a mid to long term perspective.
Mr Chandrajit Banerjee, Director General CII, said: “The fundamentals of the Indian Economy are strong and it would be able to withstand the short term issues that Brexit may create.”
He pointed out that sound economic management of the Indian economy has resulted in contraction in the fiscal deficit to a reasonable level, a comfortable external position and declining inflation – all of which make for a solid foundation to withstand the shocks. The Indian growth story is domestic consumption driven and therefore, relatively insulated compared to the more externally driven emerging markets.
Mr Banerjee also felt that India’s strong macro-economic environment and stable, predictable and transparent policy regime would make it an attractive destination for investors in such a volatile global scenario and thereby spur growth further.
However, the Indian press was less sanguine about the long term outcome of the UK leaving the EU, with the Hindustan Times’ headline claiming this was causing “frayed nerves in India”, adding that Indian policy makers were scrambling “to reassure currency and equity markets worried about the vote’s economic fall-out”.
It wrote: “At stake is not only the post WW2 European Union project, but also a vote with major implications for the global financial system, given London’s pre-eminent position, and a series of knock-off effects at various levels, including the future of the David Cameron government.”
Similarly, The Pioneer (Rudyard Kipling’s old newspaper) wrote in a leader that “If Brexit gets a green signal, India will feel the heat”, noting that India’s annual bilateral trade with Britain was $14 billion last year. “Undoubtedly India will feel the pressure along with the rest of the world,” it concluded.
Meanwhile, the Indian Express remarked upon the negative tone of the referendum debate. In a front-page article on the Wembley Arena debate headlined “Bitterly divided Britain decides on future, undecided 11% hold the key”, it wrote that: “Both sides indulged in fear-mongering, personal attacks, misleading claims and dodgy statistics. Never before in contemporary history has one seen mainstream British politics so marred by bitterness and antagonism.”
Finally, Prasun Sonwalkar for the Hindustan Times also considered the more existential questions posed by the referendum for Britain, and the West as a whole:
“If Britain is not to be European, what is it? Britain, after all, has historically been central to the idea of the West, which is not only a geographical conception, but is also constituted in the discourses of whiteness, empire, race, occident and the orient. A vote to leave will not only further challenge the strained EU project and the post-1945 liberal world order, but also the idea, idealism and ideology of the West.”