Brexit Brings Good Tidings for Indian Students But Not Business

After Brexit, Indian businesses may take a hit as they might encounter more red tape, writes Priya Virmani.

(Photo: iStock/ Altered by The Quint)

We in Britain have voted for our divorce from the European Union. Logic suggests this is bad news both for the UK and the EU. But it does highlight opportunities for India.

With the pound falling to a historic low (its lowest level since 1985) once the Brexit referendum results were out, the UK instantly has become more affordable for Indians. The UK, and London in particular, has always been a regular haunt for high networth individuals (HNIs), while for middle class India a London vacation is considered a signifier of upward economic mobility.

Jubilant Indians shared with me that they had already bought pounds in anticipation of their summer holidays. Those who have been dreaming of a UK holiday but tinkering with their affordability now say that the dream “seems so much more close, so much more doable.”

Good News for Students

For Indian students coveting a foreign education, the UK has now become more attractive because they will get more for their rupees. A British education, known for its world-leading status, is nevertheless infamous for being prohibitively expensive. The enormous fall in the pound has suddenly made a UK degree less expensive, and within the reach of more Indian students who would have otherwise rejected the UK as a study destination purely on the basis of the high costs involved.

However, whether the Brexit vote means work permits and relaxation of visa rules and regulations for Indian nationals, students and holidaymakers alike, remains to be seen. But this is unlikely at the moment. The entire rhetoric of the UK becoming more friendly towards immigration from other parts of the world, primarily the Commonwealth, including India, as EU immigration will now be robustly checked, is unfounded. No changes to Britain’s non-EU immigration policies are in the immediate or foreseeable offing.

After-Effects of Divorce

The UK, like other EU member states, had signed up to four tenets: the free movement of goods and services, of capital and of people. The agreement does not offer the ‘pick and mix’ of a sweets counter. So, before the UK can enforce immigration controls on the EU, it needs to negotiate its divorce settlement with the international institution -- the trade deals it has signed with and the international trade deals it is party too as part of the EU.

It has to bargain with the 28 EU member states on the tenets of the movement of capital and services and the fate of the 1.2 million British expats living in EU countries. These negotiations are anticipated to take eight to nine years.

In the meantime, it is both unwise for the UK to harbour the thought that it will or it can start imposing controls on the movement of people from the EU to the UK.

This confounds theories that there will be immediate barriers on EU immigration that will free space for the UK to become more lenient and welcoming towards other foreign nationals, such as Indians, entering its borders. Moreover, for the Leave camp, simply substituting EU immigrants with immigrants from other parts of the world will be a defeatist approach and one that the current sensibility of the UK that was made evident in this vote, will not tolerate.

Beyond Brexit

• Post-Brexit referendum, the falling pound value will benefit Indian students as study in UK becomes more affordable.
  
• Impact on immigrants in terms of visa and work permits would be visible only when policy for non-EU States is defined.
  
• Brexit campaigner Boris Johnson had proposed a visa-free ‘migration bloc’ between UK, New Zealand, Canada and Australia.
  
• It is unlikely that UK will impose restriction on the movement of people, till it sorts out movement of capital and services with 28 EU member states.
  
• Indian businesses likely to take a beating as dealing with EU-UK bloc ensured less red tapism.
  

A man watches Reserve Bank of India Governor Raghuram Rajan commenting on the situation after stock markets tumbled worldwide, in Mumbai, June 24, 2016. (Photo: AP)

Will Indian Traders Suffer?

But on the business front, for India the Brexit vote presents opportunities. As the UK and the EU begin trading less with each other, India could make inroads as an even bigger trading partner for both. India is currently the UK’s 12th biggest trading partner, and it would work spiking up its position.

Prime Minister Narendra Modi’s ‘Make in India’ initiative, if strategically marketed to UK and EU businesses, could well benefit. However, according to FICCI, on the eve of the vote, 1,280 Indian businesses in the UK had signed a letter supporting the Remain campaign. It was in their interest to trade with the EU and the UK as a bloc, easing bureaucracy, registrations for patents and the like.

The UK has 800 Indian-owned companies employing 110,000 people. The traction for these companies in the UK included the European market access that being stationed in the UK gave them. This will now change. The UK will arguably become a less attractive proposal for these corporates as they restrategise their UK and EU presence.

It is a mixed bag of effects for Indian nationals and businesses, and a space to be keenly watched.

(The writer is a political and economic analyst)

Also read:

Life After Brexit: What Awaits Britain in its Splendid Isolation

From Empire to Island: Britain Will Pay the Price for Xenophobia