11:25 pm - Tuesday February 19, 2019

BREXIT – Views and suggestions from India Inc. : Survey by FICCI


July 2016

BREXIT – Views and suggestions from India Inc.


Section 1: Survey Findings 1

Section 2: Impact on India’s Economy and on Indian Businesses 6

Section 3: Impact on the Education Sector 10

Section 4: Impact on Immigration 12

Annexure 14 Page | 1

BREXIT – Views and suggestions from India Inc.

Section 1: Survey Findings

The Brexit referendum on June 23, 2016 was an unprecedented global development. The United Kingdom (UK) voting for the ‘Leave’ from the European Union (EU) is expected to have considerable socio economic and political ramifications in the years ahead. The decision assumes greater significance in context of the changing global order which is moving towards greater multilateralism and where countries are striving to lower their boundaries.

According to preliminary estimates by Standard & Poor, Brexit is expected to shave off 100 bps from UK’s growth and about 50 bps from EU’s growth in 2017. Also, investment flows to the UK are likely to be affected over the near term as the decision is expected to cause skepticism among investors. Further, elections in France and Germany are due next year and the October constitutional referendum in Italy adds to existing uncertainty in the region. It is being anticipated that the real negotiations between the UK and EU might start by next year when there is greater clarity on the political front in the region.

While the impact of this historic move will take some time to unfold, FICCI conducted a quick survey to gauge the sentiment among the Indian companies having operations in or doing business with the UK. Some of the companies surveyed share deep trade and investment linkages with the UK. Responses were received from about 45 companies covering sectors such as education, information technology, tyres, pharmaceuticals, steel and steel products, automotive, textiles, apparel, financial services etc.

Highlights of the Survey

The respondents were of the view that it is too soon to assess the impact of Brexit on the global economy and India. There will be more clarity once the actual policy response from United Kingdom and the European Union is spelled out. Things can be positive if the situation is managed well by both the European Union and the United Kingdom. Nonetheless, some frictional issues that would come with the transition cannot be ruled out.

Global Economic Situation: The respondents felt that the overall economic situation would remain difficult for the next two to three years. The global recovery remains frail and the Brexit move is detrimental to the overall health of the global economy. The exit from the European Union has increased the risk of United Kingdom falling into a recession.

Impact on Investments in the UK: United Kingdom has been the gateway to Europe and the survey participants felt that UK’s position as a major investment hub will get impacted over the near term. The increase in uncertainty post Brexit will impact the confidence level of potential investors wanting to invest in the UK.

Impact on British Pound: The investors have been pulling money out of the UK and this may exert a further downward pressure on the Pound. The survey respondents based out of the UK anticipated an increase in operational costs over the near term due to this pressure on the Pound Sterling.

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BREXIT – Views and suggestions from India Inc.

% of respondents indicating investments in the UK

% of respondents exporting to the UK





% of respondents indicating investments from the UK

% of respondents importing from the UK

Immigration: The respondents expect more restrictions on immigration in the United Kingdom post Brexit. However, it was felt that the restrictions on the other EU citizens will be limited due to political reasons; Indian immigrants may have to feel the actual heat. The respondents indicated that the move might lead to brain drain from the United Kingdom.

However on a positive note, the respondents also felt that the Brexit could offer a chance for India to explore new opportunities.

Survey findings in numbers

While 48% of the survey participants indicated that their business linkage with the UK is largely for the UK market, 14% indicated that it is mainly for EU and the rest had a balanced interest in both the markets.

About half of the respondents reported that they don’t intend to set up separate operations in any other EU country over the near term following Brexit. It was said that it will take a couple of years for the actual picture to come to the fore.

43% of the survey participants anticipated a decrease in intra company transfers/movement of professionals to the UK from India over the medium term (next 3-5 years).

43% respondents cited a decrease in Indian migration to the UK over the medium term (next 3-5 years).

51% of the participants anticipated a decline in investments to the UK over the next three to five years.

About 63% of the participants indicated that signing a comprehensive FTA with the UK (on goods, services and investments) may help to mitigate any negative impact of Brexit on India. For example, if India enters into an agreement with the UK that leads to the legal services market opening up, then this could lessen the negative impact of Brexit on India-UK bilateral relations.

Business Interest of the Respondents Page | 3

BREXIT – Views and suggestions from India Inc.




Your business linkage with the UK largely for the UK market or for EU too?

Mainly the UK

Mainly EU






Impact of Brexit on your organisation’s business interests with the UK?



Makes no difference

Can’t say 7%



Plans to set up separate operations in other EU country post




Can’t Say

About 28% of companies participating in the survey indicated that Brexit is not good for their organization’s business interest in the UK. Further, while a quarter of the respondents said it makes no difference to them, only 16% considered Brexit to be good for their business. Those citing Brexit to be a positive development belonged to the education and hospitality sectors. Respondents from the auto components, apparel and IT sectors indicated skepticism about the impact of Brexit on their businesses.

Percent of respondents

Percent of respondents

Percent of respondents

Respondents divided about the likely impact of Brexit on their business interest

About 50% of the participants do not intend to set up separate operations in any other

country of the European Union because of Brexit Page | 4

BREXIT – Views and suggestions from India Inc.





Impact on Indian Migration

Will Increase

Will Decrease

Makes No Difference

Can’t say





Impact on Intra company transfers/ Movement of Professionals

Will Increase

Will Decrease

Makes No Difference

Can’t say

Percent of respondents

Exports to UK



Imports from UK







Percent of respondents

Investments to UK



Investments from UK







Percent of respondents

Impact on Bilateral Trade & Investments with UK over the Medium Term (next 3-5 years) Increase
Makes No Difference
Cannot Say


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