Here’s what it means for India. Have been in touch with Central Banks across the world on Brexit. India was no exception as it was all red in the Indian equity and currency markets on Friday.
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As soon as the markets saw the likelihood of Brexit gaining prominence (from the counting trends), stocks began to tumble and crashed more than 1,090 points in the early trade hours with foreign and domestic investors pressing the panic button.
“While a fall in the Indian markets was warranted and they may continue to face these headwinds, we expect them to perform better than most other emerging markets and also developed markets”, said Dipen Shah, Senior Vice President and Head Private Client Group Research at Kotak Securities.
“Newcastle was a squeaky win for Remain but Sunderland was a huge kick in the ribs and the bottom has fallen out of the pound”, said Jeremy Cook, chief economist at worldwide payments company, World First. This would mean that travelling to the United Kingdom will be cheaper for Indians. “The pound has depreciated against the rupee”.
In an earlier dna report, Travel Agents Association of India (TAAI), was quoted as saying, “The airline fares will be lower now”. India invests more in the United Kingdom than in all of Europe combined. Tourist visas may get cheaper and tour operators and hotels may announce attractive packages. “Who knows where it’s going to go?”
According to market observers, the initial volatility was brought about by the Central Bank Governor Raghuram Rajan’s surprise announcement about his plans to quit after the end of his tenure in September. Overseas education consultants are expected to cash in on the opportunity. Over the past years, immigration reform in the United Kingdom has already led to a steady drop in the number of Indian students enrolled in the UK.
But India’s finance ministry said there was no cause for alarm. Buying real estate in the United Kingdom is also expected to become relatively affordable.
“London has always been a favourite destination for Indian property buyers and it augurs well for the Indian investors to make their move now”, he added. With Brexit, property prices are set to fall along with with the advantage of a stronger rupee against the pound. “With UK less dependent on intra-EU immigration into UK, it could become more open to high-skilled immigration from other non-EU countries including India”. These volumes may be hit if Brexit goes through since India will have to renegotiate its trade terms separately with Britain and the EU.
“We are well prepared to deal with the short and medium term consequences of Brexit”.
The result is uncertainty in the immediate aftermath which will moderate over time, he said.
She had also spearheaded a full-blown curry clash over the “unfair immigration rules” that favour European Union migrants over non-EU workers from countries like India. Brexit could jeopardise those investments in the United Kingdom as it may hurt the operations and earnings of these companies. “While we thought it was all going to be “Remain”, it’s quite clearly not going to be as clear cut as that”.
But, at the same time, it would result in more opportunities for Indian exports as British products might lose their duty-free status in the European Union market and vice versa, pointed out exporters’ body FIEO.
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“We remain absolutely committed to our customers in the EU”. Anis Chakravarty, lead economist and partner, Deloitte in India, does not see a significant impact on the India-UK bilateral immediately as it has been more or less stable in the last five years. There can be some interim impact on our economy. If the British economy stands to slowdown because of the “vote out” it will hamper the earnings of all these companies.
