As I sit writing this a month after the UK’s Brexit decision, sterling and the stock market have been on a rollercoaster, the political landscape has shifted more that it is possible to have imagined and the newspapers speculate whether the doomsday scenarios are going to play out. Whatever side of the debate you sat on, you would not be blamed for feeling somewhat overwhelmed.
So, as someone that spends their days living and breathing supporting organisations expand into dynamic markets and in particular India, why do I continue to feel all this may benefit the UK – India trading relationship? Here are 5 key reasons:
- The UK’s International and multi-cultural mindset. From afar, it may be a concern that this has changed. However, the UK’s business community remains very significantly pro international. The UK’s youth have identified themselves as being very significantly pro international. Our key commercial hubs remain very pro international. Whichever side of the debate people sat on, this was not about not stopping trading (quite the reverse in fact). We continue to be an island of people who have a history and interest in international engagement. I really don’t see that changing and it aligns well to a more external facing India.
- India’s market access. Modi government have worked hard to engage international stakeholders and recently announced the latest in a series of changes to increase market access to foreign participants (e.g. defense, aviation, and retail). Yes, the Modi government is subject to criticism about the speed of change. But changing a country as vast and complex as India just isn’t easy. As long as the direction of travel remains positive, this is a market the UK should continue to invest in.
- Cheap (er) assets (and products/services). Sterling is now trading just under INR 88: GBP 1. The last time it was at this level was back in June 2013. All things being equal, a 10% movement in the currency clearly isn’t ideal for UK importers (although we coped in 2013). However, it also means that products, services and assets just got cheaper for Indian buyers; something which will not escape their attention!
- What about the prospect of a bilateral Free Trade Agreement? Over many (many) years, efforts had been invested in the EU-India Free Trade Agreement. Yet it remains unsigned, stuck on items such as wine and cars (which are perhaps not quite as key to the UK as other EU countries). At a recent gathering of key stakeholders in the UK-India trade corridor, a bilateral FTA was certainly not being discounted. So perhaps India and the UK might take advantage of a situation that would benefit both countries by moving quickly in this area.
- Reaching beyond EEA – risk vs opportunity. As we now know, the EEA is clearly a very material trading block for British business. With the government and EU having a timebound period to complete the re-negotiation process, this provides an interesting inflexion point during which businesses are naturally motivated to consider life outside the EU, which may well include trading outside the EU. With India’s fundamentals, it would be tough to justify why it wouldn’t be on the list for investigation.
Judging by how much changed in the last one month, it would be tough to predict the future with certainty. But, there are certainly reasons to be positive. It would be somewhat ironic that a decision over the UK and the EU had the impact of boosting trade with India. I would welcome that.