Brexit uncertainty leads to slowdown in Indian hub
This relaxed, diverse town in the east Midlands called ‘Little India’ has a history of manufacturing and enterprise, but the Brexit vote on June 23 has led to a slowdown in economic activity.business Updated: Aug 01, 2016 13:57 IST
This relaxed, diverse town in the east Midlands called ‘Little India’ has a history of manufacturing and enterprise, but the June 23 Brexit vote has led to a slowdown in economic activity, mainly due to uncertainty about how exiting the EU will play out.
Often held out as a poster city for Britain’s multiculturalism, Leicester received thousands of Indian-origin migrants from Uganda in the early 1970s, when Idi Amin expelled the Indian and Asian community at short notice.
It has since revitalised local economy and is seen as the most integrated of immigrant communities in Britain. Leicester is twinned with Rajkot, and has close business and cultural links with Gujarat and lother parts of India.
But while Leicester city barely voted to remain in the EU with a 51 per cent vote, the Midlands region voted strongly in favour of Brexit, mainly on the issue immigration. Nothing seems to have changed overtly in the city’s relaxed air, but business leaders are wary.
Uday Dholakia, chairman of the Indo-British Trade Council, told Hindustan Times that business activity has “definitely decreased”, and noted a “paradigm shift” in recent years in the ease of communication of a new generation of Indian entrepreneurs outside India.
“Language is no longer a barrier to new generation of Indian entrepreneurs and Germany, France and the Netherlands offer attractive investment destinations. Hubs like Frankfurt, Paris and Milan are more attractive to them”, he said.
“The challenge now is for Britain to develop closer trade, investment and academic links with countries like India. This will have to be led by the Indian diaspora as the government apparatus has gone beyond its sell-by date”, Dholakia added.
Nik Kotecha, CEO of Morningside Pharmaceuticals based in Loughborough, was against Brexit, but now hopes to turn the outcome to Britain’s advantage by being open to countries like India. Initial steps of the Theresa May government were encouraging, he said.
“We are not yet out of the woods, but the May government is giving some comfort. There is already promise of lowering the corporation tax. But there is definitely a slowdown, with business leaders holding off investment at the high level”, Kotecha said.
Kotecha’s company has a manufacturing base in India and mainly exports to Europe and supplies medicines to the National Health Service and aid agencies. Currency was the biggest concern in the short term, he said, noting recent fluctuations in the pound’s value.
Priyesh Patel, managing director of popular snacks company Cofresh, was very disappointed with the Brexit vote and said uncertainty was the biggest issue facing the business community in the Midlands. He regretted that the emotional issue of immigration swayed the Brexit vote.
“Business leaders have hedged until September, October; no one knows how retailers will react. We employ many Romanian and other EU workers. It is worrying, but can’t believe that they will be asked to leave after Brexit happens”, he said.
“I told my people not to panic. The key issue is uncertainty: nobody knows what will happen. There will always be immigrant communities working in entry level jobs, so it is fine that EU workers take up jobs that Indians or other settled immigrant communities won’t do”, Patel added.
Several Indian businessmen based in and around Belgrave Road - the hub of Indian/Asian business and culture - said before the referendum that they would vote for Brexit because they did not want more immigration from eastern Europe.
The Midlands region is the base for several Indian companies, including the Tata-owned Jaguar Land Rover and Royal Enfield. Dholakia said the Birmingham airport is a major point for business activity related to India, including air cargo.
“Now we really have to gear up and compete with the world. The opportunities and threats around academic links with India are interesting. In the new world, Indian and other Asian academic institutions will steal the march on historic centres of excellence. The challenge is to forge meaningful Indo-British ties” Dholakia said.