Brexit To Create Uncertainty In Near Term: Nasscom
The National Association of Software and Services Companies (NASSCOM) termed the Brexit announcement as a phase of uncertainty in the near term but a mix of challenges and opportunities in the longer term.
The Europe market is of prime importance to India. It is the second largest market for the Indian IT-BPM industry, constituting almost 30 percent of the industry’s export revenue of about $100 billion. The UK plays a key role within this market. In addition to representing a large share of our members’ activity in Europe, many use the UK as a gateway for further investment across the European Union.
“NASSCOM urges policy makers in Brussels and London to provide greater clarity and guidance on the next steps as soon as possible, so that our businesses have the certainty they need to continue to invest in UK and Europe”, said NASSCOM President R Chandrashekhar in a statement.
NASSCOM said that in the long term, however, Brexit could lead to strengthening of India-UK economic relationship as UK seeks to compensate for loss of preferential access to EU markets. This could open up new opportunities for UK and India as well. With the existing 800 Indian companies employing 110,000 individuals in the country, a deeper partnership with India may be in Britain’s interest.
Additionally, with UK less dependent on intra-EU immigration into UK, it could become more open to high-skilled immigration from other non-EU countries including India. Further, UK would be under no obligation to adopt restrictive EU data localization norms which it does not subscribe to in their entirety. All these factors could benefit India-UK bilateral economic relations.
“NASSCOM will continue to foster, to the extent possible, the strengthening of the UK-India and EU-India relationships, and this is especially the case in the areas of technology trade and all related aspects including mobility of highly-skilled workers”, stated the official statement.
Sunil Kumar Sinha, Principal Economist, India Ratings & Research said,“As the outcome of referendum on Brexit is in favour, the impact is felt across the globe. However, from India’s perspective Brexit will have both positive and negative impact. As Brexit will vitiate the already uneven and fragile global recovery, it will exert downward pressure on global commodity prices and India will benefit being a net commodity importer.
“However, with risk rising in the global financial market foreign capital will flow out putting pressure on rupee to depreciate and making Indian financial market volatile. A number of Indian corporates having exposure to Europe/UK either through trade or in case their production units are located there would be adversely impacted”, he added.
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