Brexit: India could gain as of now
The longest political divorce in recent history is near completion, with the United Kingdom (UK) and European Union (EU) agreeing to a minimalist Brexit treaty. The treaty still needs acceptance by a slew of governments across Europe. But since the alternative is divorce without mitigation at year-end, green signals are inevitable.
Indian industrial firms will be relieved that the Brexit agreement will allow them to continue to treat the UK as their investment gateway to Europe. London’s plans for becoming the financial gateway for the large capital flows coming into India are less certain. New Delhi was never enthusiastic about Brexit, seeing it as a weakening of western unity and a geopolitical gain for a rising China. More recently, however, it has seen opportunity in Britain’s desire to orient itself away from Europe and take a hard stand against China. The real test for India will be whether it can leverage the UK’s desire for some quick trade agreement successes and put together a 21st century economic partnership deal that stresses services, aligns data standards, and incorporates immigration. Brexit has given India an opportunity to show that it is not protectionist as much as forward-looking when it comes to trade, technology and investment. The question is whether the Modi government has a strategic enough sense of trade policy to grasp this chance.