Commenting on the outcome of the Brexit referendum in the UK, Dr. Naushad Forbes, President CII said, “The India-UK relationship is an important one, within or without the EU. CII reaffirms its commitment towards strengthening bilateral trade and investment ties and enhancing business linkages.”
He however noted that many Indian companies view the UK as a gateway to Europe. According to a recent study by CII, Indian companies continue to play a major part in the vibrancy of the UK economy. 2015 saw investments from India rise by 65%, making it the third largest source of FDI in the UK. In fact, India invests more in the UK than in the rest of Europe combined. Since access to European markets is one of the key drivers for Indian companies investing in the UK, Dr Forbes emphasised that with the UK voting to leave the EU, Indian companies will re-engineer their European strategy. This should not be an issue. India will not be affected due to Brexit if we look at a mid to long term perspective .
According to Mr. Chandrajit Banerjee, Director General, CII “The fundamentals of the Indian Economy are strong and it would be able to withstand the short term issues that Brexit may create. ”
He pointed out that sound economic management of the Indian Economy has resulted in contraction in the fiscal deficit to a reasonable level, a comfortable external position and declining inflation – all of which make for a solid foundation to withstand the shocks. The Indian growth story is domestic consumption driven and therefore, relatively insulated compared to the more externally driven emerging markets.
Mr. Banerjee also felt that India’s strong macro-economic environment and stable, predictable and transparent policy regime would make it an attractive destination for investors in such a volatile global scenario and thereby spur growth further.