As the Brexit negotiations progress to phase two, speculations have been rife about the ripple effects this may have on other economies having ties with one of the world’s most advanced economies, the UK. As a matter of fact, citizens of member countries of EU have a lot to be worried about, since the restriction on free passage of human capital between member- nations is set to reemerge, the non-members of EU have ironically a few positives to cheer.
What about the India Inc.?
India is a celebrated and trusted outsourcing destination for IT and BPO services, and much of the revenue of IT majors like Infosys and TCS comes in Pound. The experts have anticipated a decline in the value of Pound as the Brexit negotiations reach their conclusion. It appears then that these IT and BPO companies that employ a major chunk of the workforce and contribute positively to India’s current account will lose on their revenues from exports. Moreover, companies having offices in the UK might want to shift to other EU nations owing to ease of trade opportunities available there.
It, however, doesn’t end here. There is a brighter side to coin as well. While countries like US and Australia tightening their rules on visas to STEM (science, technology, engineering, mathematics) discipline migrants, the UK may subsequently ease its rules to attract more talent from India (Also read: India’s First National Employment Policy). Canada has recently done the same, and once Brexit frees the UK of its compulsions toward the EU, they will probably welcome more Indians.
What’s on offer for Indian students migrating to the UK for higher studies?
As a part of the pact, the UK had to earmark funds for scholarships to students hailing from EU member-nations, and this led to an obvious upper hand for European applicants. In advancing economies, like India, where prospects for higher education are not proportionate with the size of the population, the aspirants had to fight hard to find a place at UK-based universities.
But now with the obligation of preference to European students gone and also a curb on free movement between EU countries, Indian aspirants can expect a change in fortune. Their applications will be treated at par with others, and given that Indians have demonstrated immense innovation and research aptitude, an uptick in the number of positive calls for our students is sure.
How can a common Indian man bet on Brexit?
With every geopolitical upheaval comes an opportunity for investors. The ‘America First’ stance of US President Trump has raised hopes for domestic firms while exporting countries are staring at losing in export revenues and foreign exchange earnings. In the same context, the Brexit vote triggered a shift from risky assets like bonds and shares toward safe havens like gold, the value of which has been hovering at all-time highs.
Indian corporates that have business ties with the UK may feel some heat in the initial phases of Brexit; however, once re-negotiation on terms of contracts is reached, their value will only advance in the long-term. Indian investors must exercise some caution while picking up their shares or mutual funds so as to factor the impact of Brexit on their portfolios; if prudent decision making is resorted to, Brexit can, in fact, be a blessing for stock market investors.
Suvipra view
Brexit isn’t a curse for India; we only need to look at the illumination behind the media-created bubble of negativity.
Also read: Ease of Doing Business Index- The 2018 Chapter
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