BREXIT- IMPACT ON

INDIAS INTERNATIONAL
TRADE

CONTENTS

BREXIT AND REFERENDUM

RESULT AND BREAKUP

INDIAS TOTAL FOREIGN TRADE

TRADE RELATIONS OF BRITISH WITH INDIA

COMPARATIVE STUDY WITH OTHER EU COUNTRIES

IMPACT ON INDIAS INTERNATIONAL TRADE

WORD OF CAUTION FOR COMPANIES

CONCULSION

BREXIT & REFERENDUM

Brexit is the term coined for Britain's referendum too exit the European union in
order to give power to people of Britain to formulate and regulate their policies
rather then being the implementers of the policies formed in Brussels ( Head
Quarters of EU )

Referendum is the direct vote in which entire electorate ( People with voting power)
is asked to vote on a particular proposal. This may result in adoption of new law

Referendum is taken as an expression of direct democracy

Voting of Brexit was held on 23rd June,2016.

Result and Breakup

52% to LEAVE
AND
48% to STAY

Indias Total Foreign Trade (March-2016)

Particulars

Exports

Imports

Merchandise

$266.13 Billion

$379.59 Billion

Service Trade

$12.32 Billion

$ 7.18 Billion

Total

$ 278.45 Billion

$386.77 Billion

Existent Trade Relation of British with

India
Indias total trade with Britain stands at $14.02 billion with Britain out of which $8.83

Billion is in exports and $5.19 billion in Imports

India has positive trade surplus of $3.64 billion in terms of bilateral trade

INDIA'S EXPORT TO UK 2016

Accounts for
3.17% of Indias
Total Export

Textile and Clothing

Machinery and mechanical appliances
Jewellery precious stone
Auto and Ancilaries

24%
34%

8%

6%

3%
4%
5%

6%
5%

5%

Footwear
Pharma
Electrical Appliance
Iron Steel and Products
Leather Products
other

Existent Trade Relation of British with

India Contd
INDIA'S IMPORT FROM UK 2016
Accounts for
of Indias
1.34% Total Import
28%

2%
3%
3%
4%

29%

14%
4%

5%

8%

Jewellery and Precious Stone

Machinery and Mechanical Appliances
Iron Steel and Products
Instruments
Alumnium Articles
Beverages and Spirits
Aircraft and Accessorries
Plastic and Products
automation
Others

Comparative Study with Other EU

Countries
S.No

Particular

In Percentage

Share of EU In Indias Total Trade

13.75%

Share of EU in Indias Total Export

16.98%

Share of EU in Indias Imports

11.53%

Share of EU in Indias FDI inflows

14.5%

EU countries in Indias Top Ten Export Destinations

UK and Germany

EU countries in Indias Top Ten Import Destinations

Germany

Share of EU in Indias Top 10 Items of Export

15.53%

Share of EU in Indias Top 10 Items of Export

9.43%

Impacts on Indias International Trade

The various sectors being influenced are:

Economy

Trade

Services

Investment and capital flows

Migration and employment opportunities

Tourism

Financial Market

Currency

Economy

Indias economic resilience has strengthened on account of

1. Big Bang FDI Reforms and significant Jump in FDI inflow
2. Declining Trade Balance due to fall in commodity prices.

3. Increase in investment sentiment of countries due to Various

reforms of Government.
Indias strong macroeconomic fundamentals and conducive policy measures undertaken by
the government in the recent times will help in mitigating the impact of adverse
international developments as in case of BREXIT.

TRADE

At present Indias export trade with EU is about 15.53% ( including 3.17% of Britain)
of Indias total Export trade and Import trade stands at 9.43% ( including1.34% of
Britain) of Indias total import trade.

Britain's exit means that Britain and EU could compete with each other to enter into
long term relationship with increased growth of trade as both countries in EU and
Britain have big Economy and less resources so these are highly dependent on Exports
from India and China

These development could lead to

1. Trade Creation for Indian Business
2. Bilateral trade and Investment Agreements
3. Relaxation in UKBA Norms

Services and Flow of Investment Capital

Enhancement of Bilateral trade could Lead to generation of Employment Opportunities

for skilled and unskilled labour in sectors such as merchant, professional management
consultants and R&D Services

India-UK bilateral trade in services is approx. 2.5 billion - 3 billion in the recent years.

The investment inflows from EU to India will continue and are also not expected to be
impacted by the BREXIT vis--vis Indias growth resilience and promising potential
growth trajectory

Expected Depreciation of British Pound may lead to

1. Indian investors in the UK may get more favourable investment
opportunities.
2.The British investors may like to divert their investment to India and
other such countries where they expect to get better returns.
3. Long Term Investment opportunity in Real Estate

CURRENNCY, FINANCIAL MARKET

AND TOURISM

Currency Fluctuation in market will be short lived because India has decent amount of
FOREX Reserves and Strong Policy Measures have been taken by Centreal Bank of India
which nullify the Effect of fluctuation.

But Volatility in currency market cannot be ruled out until proper negotiation of UK Break
out from EU Progresses.

The impact of BREXIT on financial markets was short lived due to strong macroeconomic
fundamentals of the Indian economy and markets have regained their stability in due course
of time

Travelling to UK to become cheaper and there could be possible increase in students going
out to study with relaxation in UKBA Norms and depreciated price of Pound sterling.

Word of Caution for Following

Company
Impact of Brexit
Companies
TATA STEEL

Has turnover of more then GBP 200 Billion from 12 production

plants spread across UK

TATA MOTORS ( Jaguar

and Land Rover)

Both of them are UK Based and Largest automotive

manufacturer

Motherson Sumi

Have major automotive client in Europe and derives more then

half of its income from Europe.

Kitex Garments

Kitex Garment client mothercare derives 20% of growth from

UK

Tata Consultancy Services

For FY16, its Europe Operation grew by 12.9% and UK by

8.23%. They both are major contributor towards its revenue

Tech Mahindra

Has banking and financial clients from UK and Aquired UK

based firm Fintech.

Conclusion

To sum up, BREXIT will not have much impact on Indian economy primarily
because India is run by domestic demand and supply; although a few effects,
both positive and negative can be envisaged in some industries individually.

EU is still Indias significant trade partner and UK and Germany are among
the top ten export destinations of India and Germany is also in Indias top ten
sources of imports.

The pace of India-EU and India-UK exports and imports will continue and
achieving new growth trajectories in the coming times. India-EU trade is
expected to touch USD 100 billion in the next two years by FY2018 of which
India-UK trade would post a USD 20 billion trade trajectory.

Thank you

Aakriti Mahajan (16IB301)

Ajay Karan (16IB302)

Anish A ( 16IB306)

Karan Bhai ( 16IB322)

Monika Bansal ( 16IB332)

Satyam Pandey ( 16IB344)

Vishwanath Sankaranarayanan ( 16IB361)