Brexit and its impact on Indian IT, healthcare and automotive sectors

Abstract

In 2016, the United Kingdom voted to leave the European Union. It has been a part of EU since 1973. The European Union is a group of 28 countries that trade and allow free travel of its citizens across these countries’ borders to work and live. It was built on the World War 2’s ruins to promote economic development of European countries. Britain had always maintained a distance from the European Union. The UK has its own currency, the pound sterling. The UK also didn’t join the Schengen agreement. The Schenegen agreement removes internal border controls within the EU. Britain ever since its joining the European Union has been politically divided on its membership of the EU. This division intensified during the 2008 financial crisis where people blamed the immigrants for the failure of Britain’s economic system. This led to scepticism from voters and politicians alike on the topic of immigration and the fear of migrants arriving from poorer EU states and from Syria, Africa and the Middle East pushed a lot of people across the aisle to the side of those who against the UK’s membership in the EU. In 2012, the Prime Minister of the UK, David Cameron announced that he’ll conduct a referendum to decide whether the UK will continue being a part of EU or exit the Union. As per the promise, the referendum was held on June 23, 2016. Although the UK left the EU on 31 January 2020, the UK and the Union agreed to not make changes to the policies and keep most of the things the same until 31 December 2020. This was done in order to get more time to allow enough time to agree to the terms of a new trade deal. A deal was reached on 24th of December 2020. UK is India’s fourth largest investor, with an FDI of USD 26 billion during 2000-17. Moreover, India is UK’s 3rd biggest investor on the investment front. India also creates a substantial number of jobs in UK. More than 110,000 jobs have been created by Indian companies in the UK. UK companies also render infrastructural necessities to India. In areas like education, skill development, advanced manufacturing, technological collaboration and engineering, the deep, intricate and extensive linkages between the two countries have created a huge scope. The UK’s technological capabilities are well complemented by India’s skilled human capital. Thus, growth prospects for trade and development between the two countries are very promising and sustainable. Therefore, India should try to leverage its existing contributions to ensure that it receives a fair share of UK’s post Brexit deal.