No immediate impact on trade with Brexit but volatility in currency needs to be watched closely: Ralhan

Ludhiana/New Delh, June 24, 2016: Reacting to the Britain exit from EU, Mr S C Ralhan, President, Federation of Indian Export Organisation (FIEO) said that while it has led to political and economic uncertainty, it will not have much impact on India’s trade with Britain and EU. Much will depend on what kind of negotiation Britain works out with EU within the two years window available to replace the terms of EU membership. If Britain gets the same treatment in terms of Free Tariff and Free Movement of persons, not much will change for India. However, if Britain gets the treatment as applicable to a non-member country, it may lead to positive impact on India’s exports to EU as well as to Britain. India’s exports to EU was USD 35.35 billion while the same was USD 9.35 billion to Britain in 2015-16. Indian products may compete with British products in EU and EU products in Britain on MFN basis augmenting our exports. Similarly, any restriction on movement of persons from EU to Britain will open opportunity for Indian service providers in wide range of services.
FIEO observed that in the immediate future, volatility in currency may put pressure on India’s exports as both British Pound and Euro will depreciate giving greater competitiveness to their products particularly in third countries. With currency depreciation, the domestic manufacturer in EU and Britain may get some competitiveness as imports becoming costlier having its effect on India’s and other countries exports. This may also increase imports from Britain and EU, if their currency remain weaker on medium term basis.
President, FIEO is of the view that we need to watch the development but there is no need to panic as things will settle down soon. The real impact of Brexit can be assessed only after the final negotiation between EU and Britain is worked out.