Time for Centre to look at rest of EU

The Centre, which does not expect any major trade disruptions because of Britain’s decision to exit the European Union, will have to closely watch what happens to the rest of the EU and the proposed free trade pact with the region.

It will also have to focus on strengthening relationships with individual European countries such as Germany and France, a government official said.

“We have very strong traditional bilateral ties with the UK. Our exports to the UK account for about 90 per cent of our exports to the EU and 17 per cent of our total exports. It is also by far the largest European destination in terms of both inwards and outbound investments. The foundation is strong,” a Commerce Ministry official told BusinessLine .

Since Britain had maintained its independence from the EU in terms of maintaining its own currency and managing its own interest rates, Indian exporters do not foresee many problems, except a possible currency depreciation which may make British and EU products cheaper.

But, at the same time, it would result in more opportunities for Indian exports as British products might lose their duty-free status in the EU market and vice versa, pointed out exporters’ body FIEO.

Moreover, the restrictions that would now be imposed on free flow of labour from the EU into Britain may result in more opportunities for skilled Indian workforce. “There are indications that more workforce would now be allowed from Commonwealth countries, including India,” the official said.

Officially, India maintained that it was working on strengthening ties with both the EU and the UK. “We have seen the results of the British referendum on EU membership reflecting the choice made by the British people on the issue. We value our multifaceted relationships with both the UK and the EU and will strive to further strengthen these ties in the years ahead,” said Vikas Swarup, Spokesperson, Ministry of External Affairs.

India’s future ties with the EU will largely depend on whether the bloc manages to stay united following Britain’s exit. “We will have to wait to hear from the EU on resuming the talks on the proposed free trade agreement. The bloc may be easier to deal with as the UK, which had been the most vocal opposer of many of EU’s decisions, would now not be there,” the official said.

But there are some apprehensions that the EU may dismantle. “Cracks had started to appear in the EU and there were murmurs for sovereignty for quite some time. With Britain’s exit, these soft voices may get louder. India has to work on bilateral engagement with EU countries,” pointed out trade expert Biswajit Dhar.

COMMENT NOW