Things you need to know about Brexit

By UK India Business Council (UKIBC)

Is an India-UK free trade deal expected shortly?

The UK India Business Council will be encouraging the UK and Indian Governments to prioritise a UK-India Free Trade Agreement (FTA) as we believe this will help stimulate the crucial bilateral trade of goods and services in both directions. It won’t be an easy deal to strike, but it will be a prize worth having.

In terms of the timing, these discussions would not be able to start until after the UK’s exit from the EU is negotiated. So it may be two years – the time permitted under Article 50 of the Lisbon Treaty to negotiate an exit – before the UK and India can commence their own discussions. However, companies must not wait until an FTA is in place before seeking to trade. Both markets are fundamentally strong and offer great opportunities.

Given the political uncertainty, is this the right time to explore India?

There are real opportunities in India for UK companies, whether as an exporter or as an investor. For UK exporters, the devaluation of the Sterling against the Rupee makes goods and services more affordable, and therefore more attractive. The fundamentals of the opportunities don’t change because of Brexit – India is the rock in a turbulent sea. India’s economy is growing at over seven per cent, it has a large and growing consumer class who have an appetite for British brands, and it continues to liberalise.

In a Cabinet meeting on 20 June the Government of India removed several restrictions on foreign investment, including in defence, pharmaceuticals, food processing and infrastructure. This liberalisation increases the opportunities in India for UK companies.

Does the UK India Business Council have any additional activities planned to support UK businesses exploring new opportunities under the current scenario?

The UK India Business Council will continue with our outreach programme that highlights the opportunities in India and helps UK businesses understand how to access them. We want to expand this by providing UK trade bodies with authoritative information on the Indian opportunities for their members. Additionally, we stand ready to advise boards on how they should approach the Indian market.

We will continue to push for greater UK-India bilateral ties because we strongly believe that Brexit will make the UK’s relationship with India even more important. We also stand ready to support increased delegations to India and will use our events, activities and publications to clearly voice our position on the benefits of the UK India partnership.

For an Indian company based / looking to set up base in the UK, does Brexit lead to difficulties in doing business with the EU?

At the moment – no. In the future – maybe. The UK is still part of the EU and its single market. Only after the UK’s exit negotiations with the EU are complete will we know the type of relationship it will have with the single market. If a deal is done along the lines of the ‘Norwegian model’, then businesses in the UK will still have the same access to the single market. The UK India Business Council will be advocating such an arrangement.

What impact does the fluctuating exchange rate have on businesses?

Fluctuating rate causes uncertainty. However, the Sterling drop of around 10 per cent since 24 June makes UK goods and services more affordable and therefore more attractive to international markets. This is good news for UK exporters.

Is a business-friendly tax regime (lower taxes) likely to come into force in the UK?

The UK is already one of the best places in the world to do business. It is number 11 in the World Bank’s Ease of Doing Business Index. It has the lowest corporate tax rates in the G7. There is speculation that the regulations may be relaxed even further as the UK exits the EU.

Will it be easier for Indian skilled workers to come and work in the UK? Will Indian students find it easier to obtain visas allowing them to undertake internship / training going forward?

It is too soon to say. The UK India Business Council will encourage the UK Government to develop a migration policy that enables the right levels and type of migration to support the UK economy, including not categorising international students as migrants. We will argue that growing the number of Indian students that come to the UK will greatly deepen business-to-business connections as graduates move into their corporate and entrepreneurial lives.


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