'Govt needs a comprehensive study on trade with Europe'

June 26, 2016, New Delhi, DHNS Jun 25 2016, 23:43 IST

Threatening Britain’s own stability, Scotland has also raised pitch for independence. Britain is India’s one of the top foreign direct investors and India bilateral trade with the country is to the order of $14 billion.

But an exit from EU which possibly leaves Britain paying tariff for goods sold between two regions, may also impact investment prospects in the world’s fifth largest economy. The 10% fall in British currency post referendum was some sort of an indication of weakening investment sentiment in its economy. The government has tried to limit the fall out of Brexit by saying India has large reserves to fight the outflow and its fundamentals are strong but experts say a possible copycat exit of countries from the EU requires a rethink as far as India is concerned.

"The government should do a comprehensive study on trade relations with EU as well as UK. There are opportunities for India in Brexit but going forward, there will be challenges as well,” Ram Upendra Das, professor at the Research and Information System for Developing Countries told Deccan Herald.

"If Britain gets the same treatment in terms of free tariff and free movement of persons, not much will change for India,” Federation of Indian Export Organisations (FIEO) said.

A quick exit from EU means banks and financial companies in Britain could lose automatic access to EU. This could also mean British workers working in the EU region will be rendered jobless immediately. Problems will also arise for EU citizens who live and work in Britain.

"The whole point is that British economy is going to be gripped by uncertainty and Brexit has posed a threat to Britain’s role as the global financial capital. This would have an impact on India’s trade with that country too,” said an analyst.

A day after the Brexit vote, Ratings agency Moody’s too has downgraded its outlook for Britain, saying its creditworthiness was now at greater risk as the country would face substantial challenges to successfully negotiating its exit from the EU.