In its latest report, the State Bank of India (SBI) has said that the possible withdrawal of the UK from the European Union (EU), commonly known as Brexit – a portmanteau combining the words ‘Britain’ and ‘exit’, could open up opportunities for India.
The Indian multi-national, public sector banking and financial services company with its headquarters in western city of Mumbai also said that the Narendra Modi government should be prepared to grab those opportunities, if Brexit happens. Although the government-owned corporation admitted that Britain’s exit from the 28-member bloc could upset equations within the Eurozone, it would become easier for the South Asian country to negotiate trade with the UK.
Sharing his views on Brexit with the press, SBI’s Chief Economic Adviser Dr S K Ghosh recently said that if Britain stays outside the bloc, then India would not have to deal with many rules that come with EU membership. “UK has an expertise in cyber security and its military technology is still competitive. This can become the point of convergence under ‘Make in India’. Hence, UK may very well be compensated for the loss of market in the EU by the gains in India,” he added.
At the same time, Dr Ghosh admitted that it would be difficult to quantify the gains or losses from a possible ‘Brexit’ (from India’s perspective). He believes that Britain will remain India’s valuable trade partner even if Britons decide to leave the EU. Earlier, Indian Prime Minister Modi expressed the same view. During his recent visit to London, the premier said that the UK would continue to be the gateway to forge bilateral ties in the region.
Indian firms are in favour of Brexit, as they are well aware of the fact that there will be no need to abide by the Free Trade Agreement (FTA) with the EU, if the UK comes out of the bloc. For the last few years, the FTA has caused a discomfort among Indian firms, resulting in imports shooting up and Indian businesses becoming uncompetitive. The SBI clearly mentioned in its Economic Survey for the 2016-17 financial year that that 42 FTAs, signed by New Delhi so far, led to more imports than exports. India had to go for larger tariff reductions compared to its other FTA partners because of relatively higher tariffs back home.
Dr Ghosh is confident that the British financial markets and its financial expertise will not disappear overnight, if Britain leaves the EU. He backed the idea of Brexit, stressing that each and every country has the right to prevent its economy from collapsing.
Britain will vote on the referendum to exit from the EU on June 23.