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Brexit - What it means for India?

With the Brexit saga’s conclusion, many questions about future ramifications of the event remain. Looming large are concerns over the UK’s economic future and what Brexit means for its various partners. For India, there is opportunity in these murky waters but it must tread lightly and expect competition

British politics, much like politics anywhere, has its own share of surprises. It was on New Years Day 1973 that the United Kingdom joined the European Community, later to be morphed into the European Union, by a Conservative Party Prime Minister – Edward Heath. The membership would be further strengthened by another, this time legendary, Conservative PM – Margaret Thatcher. It would be during Thatcher's period that Brexit would be born, with some Conservatives believing that the powers of the EU were far too intrusive. Britain would grow closer to the EU by joining the 'European Exchange Rate Mechanism' in 1990, a policy to stabilise and interlink European currencies. Two years later the UK would be forced to pull out under disastrous circumstances, sending markets crashing in what would be known as 'Black Wednesday' 16th September 1992. Throughout all of this, the left-wing Labour Party was initially against the UK joining the EU. As the decades passed, Labour became pro-EU while most Conservatives wanted out.

The EU in/out debate came to head in 2016, with a Conservative PM David Cameron reluctantly calling a Referendum on 24th June. The 'Remain' votes pooled 48 per cent while 'Leave' polled 51 per cent. The irony here was Cameron facing the wrath of many in his own party by campaigning to stay, alongside previous PM's Sir John Major (Conservative) and Tony Blair (Labour), with the 'Leave' campaign being led by Boris Johnson. Cameron resigned that October, clearing the way for Theresa May to take over, even though political pundits could see Boris Johnson waiting in the wings. Johnson became PM with a clear mandate – end the kafuffle and get Britain out, which he finally did after sealing the support of the British public in a landslide general election victory and leaving on January 31st 2020, completing the cycle of a Conservative PM taking the UK 'in' and a Conservative PM dragging the UK back 'out', in one of the most politically divisive policy decisions in modern British history.

The ramifications of this will be measured over decades with even the most experienced political commentators being unable to clarify exactly what the impact will be, but alongside the naysayers, optimists are beginning to see potential in some fields, two of which look quite positive for Indians while one will leave India in a fraught position.

Global Security

The United Kingdom may well have withdrawn from the EU, but it may not remain as 'united'. Scotland has, for centuries, had closer relations with Europe than England. In their freedom struggle, they have often sought, and received, help from European allies who were as keen to stifle the economic and military powers of English monarchs. Once again, Scotland's demand for independence has come to the fore, triggered by Brexit. A complex scenario has presented itself to the United Kingdom – firstly, if Scotland votes for independence, Wales and Northern Ireland are likely to follow. This will be the end of the 'United Kingdom' and the world will get three new sovereign nations – Scotland, Wales and England. It is difficult to predict if the people of Northern Ireland will choose to stay with England, join the Republic of Ireland or become an independent country.

The impact of this rupture will be wide ranging. The British Royal Navy has its nuclear submarine base tucked away in the mountainous terrain of Scotland, Faslane. This not only affords protection for the base, but enables the Royal Navy, on behalf of NATO, to guard the easiest path of entry to the Atlantic Ocean for the Russians. If Scotland breaks away, the base will be relocated, leaving the gateway open. The Russians are prone to sending warships past the gateway and into the Atlantic to test the capability and resolve of NATO, but with no base there, the Russians have

free access. If Russia chooses to increase naval activity in the Atlantic, which threatens the United States, NATO will respond. India, ostensibly 'non-aligned', is a close trading partner of Russia, and will be torn between the NATO group and its old friend, Russia.

Education

What was rare as recently as the 90's has now become the norm, at least for the middle and upper classes of India – a 'Foreign' education, and the destination of choice has been the UK. Indians have been flocking in droves, not so much for Bachelors degrees as they are longer and costlier, but for Masters, PhD's and short courses, a 'badge of honour' on a resume to show that one has studied 'abroad', even if it was a course that lasted only weeks.

Although the inflow of cash has been mainly from the Chinese, universities and colleges in the UK have been reaping the harvest of Indians too. Exempted from the nominal rates for UK and EU students, Indians have been paying extortionate rates for post-graduation studies in the UK. With the UK out of the EU, EU students will now ponder upon the financial viability of paying 'overseas' rates for a UK education versus staying within the EU and paying less. This vacuum is expected to be filled by Indian students. The Chinese, as usual, have a long-term strategy – they been tying up with UK

universities and opening branches

in China, allowing their students to get a foreign education, and the associated branding, without leaving the country. With both the Chinese and EU influx shrinking, British universities are looking at India.

Professor Indrajit Ray, who teaches Economics at Cardiff Business School, sees a bright future for Indian students "The post-study work visa, allowing students to work in the UK for a number of years after completing their course, was restored 3 years ago. This allows families in India to invest in the education of their children in the UK knowing they will be able to stay on and recuperate those funds." Whereas the Chinese students tend to go home, Indians prefer to stay on and work. He went on to explain that a UK education was previously solely the domain of the Indian elite, but that now even the middle classes are being able to afford sending their kids to the UK. The numbers of Indians applying for Bachelor's degrees has also seen a steady increase.

With India having the largest footprint of the British Foreign Office, and the British government having other wings such as the Department for Trade & Industry and the British Council, both with a similarly strong presence in India, we can expect the Johnson government to make a concerted effort to increase the numbers of Indian students going to the UK.

Business

The UK has always been a favourable destination for Indian businessmen looking for opportunities, this was enshrined with the Tata takeover of the iconic Jaguar Land Rover brand (the car used by the British PM) and the Mittal acquisition of British Steel.

Vishal Jhajharia, of the Merchant's Chamber of Commerce & Industry, believes the loss of benefits to EU companies has now put Indian companies on a level playing field. "I have seen the British Deputy High Commission engaging with the Kolkata business community, but the ideal would be a 'Free Trade Agreement', the waving of all import duties for Indian companies, that would really boost trade with India. ASEAN nations have a Free Trade Agreement, if the UK were to sign one with India, we could do a lot more".

Gopal Jaidka, a Kolkata businessman also believes India has a lot to offer the UK "As trading with the EU will become more expensive now for the UK, it will be a great opportunity for Indian companies to export to the UK, given our cost advantages. Sectors that could benefit from this include agriculture, aquaculture, automobile parts & ancillaries and processed foods".

The picture is not entirely rosy, according to Shashi Tharoor "There's no doubt that the UK will now look to India for trade and investment. But they will want concessions from us that we are unlikely to grant without reciprocity in such areas as student visas and work permits, where the UK has been noticeably unhelpful in recent years. It is sad but true that the Chinese enjoy far more generous terms in both these categories than Indians do. If Britain comes looking for a market, it's time to drive a hard bargain on all the issues where we have not been able to make headway with them in the past."

While it is true that EU nations have lost out on the benefits of the UK belonging to their group, India is not the only nation keen to take advantage of this. The Chinese have already been preparing for this, President Trump has been promising "great deals" with a post-Brexit UK and other nations will be jostling too. It now falls upon the business houses and leaders to lean on the Indian government to coax a deal from the British that works well for Dalal Street while being fair on students and migrant workers.

Anthony Khatchaturian

Anthony Khatchaturian

Our contributor helps bringing the latest updates to you


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