INDIA will become even more important to the UK than it already is following Britain’s dramatic decision to break away from the EU, the chair of the UK India Business Council has said.
Patricia Hewitt told Eastern Eye that the council and the CEO Forum, together with UK Trade & Investment, would play a vital role in ensuring there was more commerce and investment to the
benefit of both India and Britain.
“Although the UK’s future relationship with the European Union will not be clear for some time, the UK government and the Conservative party leadership contenders have stressed the need to
build even stronger economic and trade partnerships with high-growth countries – of which India is of course the leader,” Hewitt said.
Her comments come after the unexpected result of the EU referendum last month, which has prompted India and Britain to prepare for a fresh future outside the union. However formal talks
will not be held until after a new Tory party leader is chosen in September.
Following the vote on June 23, business secretary Sajid Javid called leaders of business organisations and firms to Westminster to reassure them, and said his officials would contact major
inward investors in the coming weeks.
Last Thursday (30), as he chaired a new business engagement group, Javid added: “Now more than ever, businesses need certainty so it’s vital that the government maintains an open and continuous dialogue.
“We must work together to make sure the world knows the UK is still open for business and remains an attractive place to trade and invest.” In New Delhi, Narendra Modi’s government is said to be “closely following” recent Brexit-related developments.
Vikas Swarup, the spokesperson for India’s ministry of external affairs, said it was too early to understand the implications of Britain’s exit from the EU on Indian businesses and students.
“We have been following developments very closely. We will have to wait and see the nature of the relationship that will evolve between the UK and European Union,” Swarup said last Friday (1).
He stressed that India has a strong and multifaceted relationship with the UK and the EU, and is committed to strengthening the ties further.
Following the referendum results, our high commissioner in London organised a meeting with representatives of various sectors of Indian businesses to understand their reaction to the referendum results.”
India is the third-largest source of foreign investment in the UK, and Indian companies invest more to the region than in the rest of the European Union combined.
Britain announced plans to cut corporation tax to less than 15 per cent as chancellor George Osborne said that he wanted to build a “super competitive economy” with low business taxes and a global focus over the weekend.
Later this week, a delegation of Indian business leaders led by the Confederation of Indian Industry (CII) is set to visit Britain.
“The three-day visit aims to reinforce the vibrant and dynamic India-UK economic engagement and highlight new bilateral business opportunities,” the CII confirmed in a statement.
Some in India believe that there could be opportunities for beneficial trade deals outside the EU.
Arundhati Bhattacharya, chairperson of the State Bank of India (SBI), which has operations in the UK and Europe, said this week that despite uncertainty in the financial
market, Britain’s vote to leave the EU could work in India’s favour.
“As trade strategies are reworked, there could be potential advantages in the form of better market access for India to the EU and Britain,” Bhattacharya said.
Shuchita Sonalika, director and head of the UK Confederation of Indian Industry (CII), told Eastern Eye that the organisation was holding consultations with member companies to do an impact analysis, assessing implications on various industries.
“There are questions around tariffs, corporate entities, contract laws, patents, foreign exchange rates, talent mobility. Much will depend on the policies that emerge from this point onwards,” she said.
“Indian companies are waiting and watching. They will accept, adjust and adapt in time.”
In a survey by the Federation of Indian Chambers of Commerce and Industry (FICCI), whose findings were released on Tuesday (5), 63 per cent of participants said a new free trade agreement with the UK on goods, services and investments may help to mitigate any negative impact of Brexit on India.
Encouragingly, half the respondents said they did not intend to set up separate operations in any other EU country over the near term following the vote.