Is the UK’s divorce from the European Union an advantage for India?
In June of 2016, a nation-wide poll was conducted in the United Kingdom(UK) known as the ‘National Referendum’, 52% of the UK citizens voted for their country to leave the European Union(EU) while 48% wished to remain in the union. This nationwide referendum resulted in a portmanteau BREXIT which refers to Britain’s official exit from the EU.
What exactly is the European Union?
After the dreadful experience that Europe went through after World War II, the European steel and coal industries decided to build a bloc of powerful European countries that would work co-dependently as a union to support each other on economic and political fronts and remain at peace. The EU currently consists of 27 European countries excluding Britain.
The EU forms a bloc that provides free trading between European countries with no extra trade tariffs and charges so that goods produced in one country can easily circulate into the rest of the member countries. Currently, the EU also gives 40 free trade agreements with 70 nations to its member countries also involving them in international trade.
The EU also allows free movement of people to live and work across borders. That means EU nationals can live and work in the UK easily while Britons can also live, work even contest municipal elections and vote in any European country.
The EU also has a common currency system “Euro” which was created to ease transactions and trading processes. While 19 countries adopted Euro, several countries chose to use their own currency like Britain (pound), Denmark (Danish krone), Czech Republic (Czech koruna) and 5 others.
The European Union has its own governing system including a council, a Parliament and a working commission that follows a common set of EU rules and regulations which all countries have to abide by making the judicial process simpler.
If staying in the EU gives a safe shelter then why does the UK want to leave the EU?
Britain has been officially declared out of the EU on January 31, 2020, after being a member for almost 47 years. Currently, the UK is in an 11-month transition period in which it continues to abide by the European Union’s rules and regulations while deciding on trade and immigration policies with the EU and other countries post-Brexit. A deadline has been set by Prime Minister Boris Johnson to complete negotiations and fly free by 31 December 2020.
Apart from being Europe’s most important financial partner and export market, Britain could set to lose free trade agreements and chargeless trade taxes which would eventually affect Brit jobs in different countries.
According to an article by the website Street, the Government has projected in 15 years that Britain’s economy would be 4.9% smaller if it chooses to leave the EU. But the UK is ready to accept the challenge and leave the EU for the following reasons:
- The UK has a high employment rate, which attracts migrants from poor countries in the EU like Lithuania, Italy & Romania in bulk. The EU rules require the UK to admit EU citizens whether or not they have a job prospect or educational qualification, which is increasing pressure on the UK considering their size and population. According to a survey in 2015, 333,000 immigrants came to the United Kingdom in search of a job.
Therefore to limit immigration, post-Brexit intends to develop a more sophisticated immigrant policy that allows potential migrants with points based on their educational qualification, language skill, and age.
- The Conservative party of Britain(Right wing) believes that the EU has an anti-democratic structure as the EU policies have shifted the bureaucratic decisions to Brussels(EU headquarters) rather than residing with individual countries. It imposes burdensome regulations which makes the decision making difficult on domestic subjects like agriculture, copyright and patent laws, immigration policies, trade deals, etc.
According to an article by The Vox, the Government says that the UK has to pay the regulation cost of 600 million pounds every week to follow and ensure rules by the EU. (although the figure is disputed).
- The Brexit supporters say that the EU gives a lot of authority to corporate elites and businessmen which doesn’t bring significant benefit to the government. The members of the EU require to make an annual contribution to the EU budget, the UK contributes 19 billion euros which can be put to a better use post-Brexit.
- The EU makes decisions unilaterally without actually involving people’s opinion or choice. Many people have protested against the lack of European patriotism among leaders who don’t seem to have a deep emotional connection to the idea of unified Europe.
Will India be at an advantage by BREXIT?
“ Mutual strength in technology and innovation cities like London, Bengaluru, and Mumbai are producing game-changing companies and as Indian economy goes from strength to strength we see lots of opportunities for collaborations between two nations.”
Says Allen Simpsons, MD of Strategy and corporate affairs in London in an article in Business today.in
The UK Prime Minister Boris Johnson has repeatedly singled out ‘India’ in the list of countries he wishes to strike an enhanced trade agreement as the UK sees a lot of potential in investing in India.
Brexit would surge Foreign Direct Investment (FDI) into Indian markets which would propel the slow pacing Indian economy. According to an article by business today, FDI market data shows from the year 2000 to 2016 the UK invested more than USD 24 billion into the Indian industry, which gave stability to Indian companies, therefore, building confidence in investors and attracting more investments.
Indian diaspora of students who study in prominent UK Universities have an opportunity to get jobs in the UK after degree once Brexit follows. The UK has already encouraged skilled scientists and engineers by issuing them with fast-track visas. According to a survey, the movement of skilled workers from India to the UK increased at the fastest rate in 2018 over 55,000 skilled work visas were issued. From April 1, 2018, to March 31, 2019, 21,165 Indian students were granted Tier 4 (student) visas for the UK giving them more opportunities to pursue higher education.
As India improved its ‘Ease of doing business’ ranking which now stands at 63rd out of 180 countries, reduced its corporate taxes, British companies would also make a profit as they invest in Indian markets.
Trade, investments, climate change, and immigration will be top of the agenda for an expected India visit, said Mohan Kaul, President of Indian Professional Forum who believes Healthcare, Technology & financial services particularly stand to benefit in a post-Brexit India-UK tie.
India stands a challenge with the European Union
Indian IT and Telecom companies, for example, Bharti Airtel has seen significant growth in the UK markets along with other financial, pharmaceuticals and engineering and energy services now stand two options, either leave the UK and relocate to the EU to service both markets or remain in the UK and divide their investment for both markets.
According to the Hindu business line newspaper, NO Indian producer-exporter will gain automatic, duty-free entry into the EU for their merchandise whether they are Made in India or UK.
With different tariff rates and customs checks with EU, UK, Northern Ireland and the Republic of Ireland, India now needs to strike a balance in investment and trade to run their businesses in these countries separately.
Britain’s exit was a major blow to the dream of unified Europe, other European countries are now dreaming to follow Britain’s footsteps and QUIT.
