Why is India a ‘safe haven’? There are several factors which attribute to make India a safe haven for the investors. The strong macro-economic parameters and the big domestic market were the major insulations to India. The foremost of them were the low short-term external debt and the kitty fraught with sizeable foreign exchange reserves. Unlike the Asian currency turmoil in 1997, where the economies of a number of Asian tigers were decimated by big short-term debt, the prudence of India’s external resources management geared up the investors’ confidence in the country. India’s short term debt is only 26 per cent of its total external debt. Its foreign exchange reserves leapfrogged to US $ 330 billion, equivalent to ten months import.

In terms of trade, EU, without UK, was never a strategic partner country for India. It was UK, which pioneered EU, to be the big trade partner of India. Without UK, EU with 27 countries, accounts for only 13 per cent of India’s total exports to the world. In imports, it accounts for only 10 per cent of India’s world imports. Therefore, EU will play a low key role for India’s trade expansion after UK exits EU.

Another noteworthy feature of India-EU trade relation is that India’s export basket to EU and UK are complementary to each other. The biggest items of India’s export to EU and UK are textiles. In 2014-15, textile accounted for one –fifth of India’s exports to EU (including UK) and one-fourth of India’s export to UK . Given the complimentary nature of trade baskets, exit of UK , which houses a large NRIs residents, bodes well for India’s trade expansion with UK.

Brexit is likely to impact on India-EU FTA (Free Trade Agreement) negotiation. Brexit will let India loose charm to cling to FTA. Already India is in the process for recalibration of its strategy for renegotiation of tariff offers. In turn, Brexit will unleash new opportunity for India to initiate FTA with UK. Trapped in long-period recession, which is unlikely to recover in near future, EU will recede to non-priority zone of India after Brexit. Indian traders will focus more on trade expansion with UK of their textiles and other products through the route of FTA. Currently, UK accounts merely 2-3 per cent of India’s global trade.

Close on the heels of India and UK gaining economic partnership bilaterally, Brexit will emulate India an opportunity to UK to enter Asia market. Currently, UK is reeling under huge trade deficit, mainly on account of its low exports to EU majors, such as Germany, Netherland, Norway and Italy. Brexit will force UK traders to reinvent its trade opportunities with the rest of Asia as a measure to set off the losses of EU market due to loss of tariff preferences.

To this end , India can provide a launching pad to UK to enter the Asia market. Asia is the future wing of global growth. Emerging Asia warrants for a big market with a population of over 622 million. So far, Asia was put in the backbench in UK’s priority for trade expansion. Currently, Asia accounts merely 22 per cent of UK’s export against EU and USA accounting 53 per cent and 16 per cent respectively. Over-dependence on EU, which was reeling under a long period of recession, pushed UK into a big trade deficit. In 2015, UK’s current account deficit surged to 5.2 per cent of GDP, which is in a panic zone, according to world standard. The large trade deficit was the major factor, accounting for 2 per cent of GDP.

India has developed a strong foothold in Asia in expanding its trade relation after Look East policy. Annually, nearly half of India’s exports are shipped to Asia. India has FTA (Free Trade Agreement) with ASEAN - 10 countries, which include major Asian markets. Given India an emerging power house in Asia, independent UK in the post-Brexit should utilize India to accelerate its exports to ASEAN.

For example, drugs and pharmaceutical industry is a case in point. UK is the biggest foreign investor in Indian drugs and pharmaceutical industry. Of the total foreign investment in Indian drugs and pharmaceutical, UK accounted for 30 per cent during 2000 to 2014UK can trigger its export of India based drugs and pharmaceutical to ASEAN 10 countries, with which India has FTA.

Last year in July, geared by zeal to enter ASEAN market , UK Prime Minister David Cameron, visited four leading ASEAN member countries - Indonesia, Singapore, Vietnam and Malaysia — accompanied by 30 member strong British delegation members The overdependence on EU fractured UK’s initiative to expand its trade ties with ASEAN.

The surge in scope for trade expansion with India and its close ties with Asia will likely stimulate independent UK investors to intensify their investment in India. UK is the third biggest foreign investor in India. India’s FTA with ASEAN majors and its potential to enter Asia, will act a boost to UK investors in India.

Along with British investors, NRIs in UK will focus towards India after losing the EU market. So far, NRIs in Britain were languishing to invest in India. NRIs in Britain were keen to invest in UK in lure of EU market. So were the Indian investors in UK. Many of these NRIs and Indian overseas investors have their headquarters in UK. This was because UK was the launching pad for market access in EU. Now, with Brexit letting UK losing market preferences in EU, many NRIs as well as Indian investors in UK are likely to shift their focus to India, which offers a robust growth.

Brexit unleashes bigger opportunity for Indian immigrants in UK. Given the EU rules, which restrict member countries to prefer EU immigrants over non-EU immigrants, Brexit will get UK rid of the apartheid rule and take the advantage of low cost Indian professionals. Under the rule, EU countries can opt for non-EU immigrants, provided there is shortfall of talents within EU. The strict EU immigration law has virtually curtailed the scope of Indian immigrants at the time when UK was experiencing greater shortfall in professions such as physicians, nurses, IT professionals and researchers.

Therefore, Brexit provides a challenging task to Modi government to bring back independent Britain in its claw for its development works with British and NRIs investment and negotiate for free passage for Indian immigrants to Britain. (IPA Service)