What is Brexit, Why Should India Care?

The UK is set to hold an in/out referendum this week on whether Britain should exit from the EU (Brexit) or stay.

A young couple with faces paint in European Union, left, and British colors, pose with a sign “Our Love For Great Britain” in Berlin on Sunday to support the ‘ Remain’ voters in Britain’s referendum. (Photo: AP)

What Are the People of the UK Voting On?

The question on the paper that will be handed to voters is:

Should the United Kingdom remain a member of the European Union or leave the European Union?

After polling stations close on Thursday, 23 June, all the votes will be added up. That’ll give two totals for Leave or Remain.

What is the European Union?

It’s a partnership of 28 European countries. It’s based around the idea of a “single market” allowing goods and people to move around freely. It has a currency, the Euro, now used by 19 of its member nations, although the UK has kept the pound sterling. But it’s important to remember that the EU is a political as well as an economic entity. It has its own parliament, and sets rules on a lot of aspects of everyday life.

Where Does the Term ‘Brexit’ Come From?

This is a shorthand term for a British Exit from the EU. It first popped up four years ago, after all the agonising about Grexit, the possibility of Greece leaving the Eurozone. And there’s more – other variations include Fixit, as Finland debated earlier this year whether it should hold its own referendum.

If the UK does vote to leave the EU, there could well be political pressure on Edinburgh for a second referendum on whether Scotland in turn would want to leave the United Kingdom.

Most leading Welsh politicians are backing the campaign to stay, though the polls show public opinion is more divided. And there’s a great deal at stake for Northern Ireland. If the UK leaves the EU, there could be new customs checks across the border between north and south, a land border between a UK which is “out” and an Irish Republic which is very definitely inside the European Union.

Why Should India Care About ‘Brexit’?

• #Brexit will have an “adverse impact” on investments in India.
  
• Indian companies are the third largest source of FDI in the UK.
  
• Over 800 Indian companies have presence in the UK.
  
• Fastest-growing Indian companies in UK generate over 26 billion pounds of turnover.
  
• Many will need to find another European city to serve as gateway into the EU.

Video Editor: Mohd Irshad Alam

Here’s BloombergQuint’s Aayush Ailawadi assessing the impact of a potential Brexit on India.