Britain’s Divorce Letter to EU Triggers Worries for Indians

Brexit Issue

Brexit Issue

With British Prime Minister Theresa May signing the letter for the exit of her country from the European Union (EU), whatever public discourse was going on regarding its political and economic impact on this country now lies bare before the world.

Though the process of Britain’s exit would be completed by March 29, 2019, but the manner in which the two sides’ ended their relations—after more than four decades of partnership—has left very little to say how those who supported the anti-Brexit move would be feeling right now.

In the last year’s referendum, 52 percent voted in support of Brexit, while 48 percent voted against it and for them the move appeared to be a “step into the unknown”. While pro-EU supporters will continue to simmer in discontent, for Indians too, the development will not be good.

However, it is too early to comment on the implications of Brexit on Indian companies. Around 1,000 Indian companies use London and other parts of the United Kingdom as their base for access of goods to the European market. Although most of them have already relocated their staff and other things to other European capitals, yet it is sectors like IT, auto, metals, tours and travel—having significant presence in the region—that cannot rule out some impact on their businesses.

Worries in IT Sector

Already, the country’s IT sector is saddled with numerous challenges. The Trump administration has made visa norms tough for Indian IT companies. Even as they are working out ways to deal with the US administration on visa, they find themselves in the dark after the Brexit.

The UK is a highly lucrative market for Indian IT companies. It can be analysed from the fact that of the total US$108-billion worth of export the Indian IT companies made in 2015-16, 17 percent of revenue came from the UK and around 11.4 percent from other nations of the EU. This apart, currency volatility has always been a concern for Indian IT companies. The pound has depreciated over 20 percent against rupee. This has led to reduction of cost arbitrage for companies outsourcing their wares to the UK.

Auto Sectors’ Concern

Several Indian auto companies have their manufacturing facilities and clients in the UK. They are utterly confused with regard to their businesses. Tata’s Jaguar Land Lover (JLR) has its base in the UK and it is from this base it exports its JLR vehicles to the European market. Of the total JLR sales across the world, about 25 percent of revenue to Tata comes from Europe. Similarly Motherson Sumi, another Indian auto company with its headquarters in Noida, receives around 50-60 percent of its revenues from the UK and other European market. Following the Brexit, it is feared that this auto company’s earnings would suffer an impact.

Disquiet Among Goan Origin Residents

Thousands of Goan origin residents possessing Portuguese passports stay in the UK. They have made London and other parts of this country their home for ages. With Brexit becoming a reality, they fear that they would have to move out of Britain which is their home land for years.


Though more clarity has to come on the Brexit issue, but it is not as simple as we see it. The Parliament of Scotland has already passed a resolution to hold another referendum on independence, even as Prime Minister Theresa May has made it clear that her government would enter into Brexit talks on behalf of the whole UK, comprising England, Scotland, Wales and Northern Ireland.