by Sangeeta Haindl
'Brexit' is a word on everyone's breath, since UK Prime Minister David Cameron announced a referendum on whether Britain should remain in the 28-nation EU to take place on 23 June this year. A referendum is a vote where everyone of voting age gives a "Yes" or "No" answer to a question; whichever side gets more than half of all votes cast will have won.
Eurosceptics believe that if Britain withdraws it would reverse immigration, save the taxpayer billions of pounds and free the country from an economic burden. Others argue that leaving would lead to deep economic uncertainty and cost possibly millions of jobs. There have been a few attempts to quantify what an exit from the EU would do to the size of the UK economy. The Brexit camp says the EU moves too slowly on trade and that Britain on its own would strike deals more quickly. Others warn that Britain, with a population of 60 million people, would go into trade talks in a weaker position on its own than as part of the 500-million strong EU.
America, China and India have made clear that they would be more interested in a deal with the EU than one with Britain alone. While the Federation of Indian Chambers of Commerce and Industry (FICCI) warned that Brexit could harm investment by Indian businesses in the UK Growing trade has been a priority for governments in both countries in recent years; the FICCI statement on the internal affairs of other nations are extremely rare, and a sign of the concern in India.
Therefore, it is worth considering how India would greet Brexit because Indian companies are a larger source of greenfield investment in the UK more than China. A greenfield investment is direct foreign investment, where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up. In addition to building new facilities, most parent companies also create new long-term jobs in the foreign country by hiring employees. India is the third-largest source of foreign direct investment into the UK, after France and the U.S., creating thousands of jobs and safeguarding many more, according to the British Department of Trade and Industry last year.
Dr A Didar Singh, secretary general, FICCI, said in a statement, “While deciding on membership of the EU is a sovereign matter for Britain and its people, Indian industry is of the view that foreign businesses cannot remain isolated from such decisions. The UK is a valued economic partner for India and we firmly believe that leaving the EU, would create considerable uncertainty for Indian businesses engaged with the UK and would possibly have an adverse impact on investment and movement of professionals to the U.K.” Referendums are unpredictable, though latest opinion polls show the British public are fairly evenly split. India, along with the rest of the world, is waiting for a decision on 23 June.
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