Wednesday, 29 June 2016

THE BIG- FAT- BREXIT!

Understanding BREXIT

Brexit has been a political goal that has been pursued by various individual, advocacy groups ,and political parties alike. Such a referendum was also held back in 1975 where in Britain had voted against exit from the EU(then European Economic Community).





Why BREXIT ?

·         EU threatened Britain’s sovereignty.
In the past few years’ , various policies of the EU have shifted focus from individual member states to the central bureaucracy in Brussels. Various  topics like competition policy, agriculture , copyright and patent law the EU rules override the nation’s laws.
The EU also lacks accountability to the British citizens’ or to their elected representatives in parliament.
·         Irksome Regulations of the EU on the Britain
Regulations by the EU according to supporters of Brexit have adverse effects on the economy of the country causing losses worth  millions of dollars every month. These include regulations on Vat Services on energy bills, fishing,  immigration laws, Banking regulations among other things.
·         EU restricts reform
Supporters of the Brexit regime feel that the EU entrenches Corporate interests and prevents radical reforms.
·         EU allows too many immigrants
While the main cause for EU’s exit is based on economic reasons, n as the EU law but the emotional case for Brexit is heavily influenced by immigration as the EU laws provides citizen of countries of the EU to freely live travel and work in other EU countries.This has severely impacted British citizen’s especially since the financial crisis of 2008 due to which people from various European countries had migrated to Britain in search of jobs undercutting the native working population.
Post Brexit the Britain may follow a grade point system as adopted by Australia for allowing immigrants.
However,   it would be difficult to determine the actual effects of the BREXIT till it actually happens. The process of BREXIT will take place gradually over a period of 2 years’. While there are various pros there might be a lot of cons in terms of trade and investment-Britain stands at the entry point for all trade with European Nations.


BREXIT: Impact on India
Pic Source:Internet

·         Stronger Ties with Britain: Brexit could help strengthen India-UK economic relationship as the UK seeks to compensate for loss of preferential access to EU markets.India’s focus on innovation, entrepreneurship and high-end work renders it a very attractive destination from a talent standpoint and equally in terms of market access. This could work to the benefit of the IT sector in India since the UK currently accounts for about 17 percent of India's IT exports worldwide.
·         Positive Balance of Trade: Information available with the Ministry of Commerce and  Industry shows India's bilateral trade with Britain stood at $14.02 billion in 2015-16, out of which $8.83 billion was in exports and $5.19 was in imports. The trade balance thus was a positive $3.64 billion.
·         Import and Export: UK exports textiles ,clothing,machinery and auto ancillaries from India.Almost 17-18% of the total exports in the month of April, 2016 is to the UK.On the other hand India(mostly pharma) imports 1-2% of the total imports from the UK.
·         Currency: The pound may take a falling against the dollar leading to a fall in the rupee
·         Make In India : Post Brexit The UK will be free of a lot of tariffs and taxes of the EU .It will be able to provide India much needed investment and expertise in cyber security and military technology amongst other things thus ultimately aiding the PM’S MAKE IN INDIA initiative.

·         Indian Companies : Over 800 Indian Companies are involved in direct trade with the UK.Brexit would mean a higher cost for these companies as traditionally London has served as a standpoint for all trade for these companies.Brexit would mean higher tariffs and taxes for these companies as UK exits the EU.

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