It’s advantage India as UK seals Brexit deal with EU

The recent Brexit deal between the United Kingdom (UK) and the European Union (EU) augurs well for India’s service exports with curbs in place on free movement of professionals between the two markets of Europe.

As per the Brexit trade and security deal signed on Thursday (December 24), UK citizens will no longer enjoy unrestricted freedom to work, study, start a business or live in the EU and vice versa. However, the EU and the UK will have tariff-free and quota-free access to each other’s market.

Indian companies have an advantage in the sense that the deal allows them to sell to EU markets not only at zero customs duty but also without any quotas being imposed.

“So far as goods are concerned, there is no change. It may sound selfish, but had there been a Brexit without a deal, India would have got better market access in some sectors. The current situation is also good because Indian exporters who were catering to the EU and UK markets will not have the challenge of meeting different standards and registrations for the markets,” Ajay Sahai, director-general of Federation of Indian Export Organisations, told The Mint.

“In sectors such as IT, R&D, architecture and financial services, we may gain in both the markets but particularly in the UK. For example, in the IT sector, India’s competitor in the EU, particularly in the lower segment of services, is Poland. Now, because Poland will have restrictions on the free movement of professionals, that may be to the advantage of India,” Sahai said.

“The Brexit deal will help large Indian investments in pharma, steel and engineering in the UK as there will be no limits to the volumes they can sell into the EU,” Prof. Biswajit Dhar, a former member of the Board of Trade, told The New Indian Express.

India’s service sector will emerge as the biggest beneficiary because bilateral services trade between the UK and EU is substantial.

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However, Indian companies with headquarters either in the UK or the EU to serve both the markets may face some trouble due to curbs on the movement of professionals.

Another advantage with Brexit is that it gives India the opportunity to sign trade deals separately with both the EU and the UK.

UK Prime Minister Boris Johnson comes to India on January 26 as the Republic Day chief guest. India Prime Minister Narendra Modi can use this occasion to start some preliminary discussions for a trade deal, though the UK has prioritized Australia and New Zealand over India for signing free-trade deals.