Impact on India’s Trade and Immigration with Britain in the Aftermath of Brexit

Dr. Archana Verma

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The situation is not as bright as it appears on the surface…

On 23rd of June, 2016, Britain held a referendum to ask its population whether Britain should remain in the European Union (EU). The vote to leave the EU won by 51.9% as against the 48.1% votes to remain in the EU. It was remarkable that the economically strong areas of Britain, such as London, Oxford, Cambridge and Scotland voted to remain, while the countryside and small towns voted to leave the EU. On 29th of March 2017, the British PM Theresa May sent an official letter to the EU President confirming the intention of Britain to leave the EU (popularly known as Brexit). It will take about 2 years for Britain and the EU to complete the leaving negotiations and if all goes according to plan, then from 29th of March 2019 Britain will cease to be a part of EU. During these 2 years of negotiations, Britain will have to follow all the EU regulations and can’t enter into a trade deal with any non-EU country.

Implications of Brexit on Trade and Immigration

International trade and movement of immigrants between trading partners are intricately linked, because movement of immigrants is seen as an advantage of international trading partnership. It brings advantage to the people who move to their countries’ trading partners for greater economic benefits. Because of this, EU laws specify that 1) Aal member countries of EU shall move their goods for trade within the EU zone free of tariffs and customs and 2) citizens of the EU countries should be able to migrate from one EU country to another for business, work and residence without visa restrictions. Further, the member countries of the EU shall not engage in free trade with non-EU countries because it creates competition with the free trade zone created within the EU for the benefit of the EU member countries. As for immigration, the EU member countries can invite immigrants from non-EU countries, but they have to give preference in work and business to the EU immigrants. In effect, this means that within the EU zone, the citizens of the EU countries find it easier to move, transport goods, find jobs and do business. This has sustained the economy of the EU for nearly 40 years of its existence and has created EU as the largest free trade market in the world.

During Britain’s membership of the EU, many British citizens have moved to other European countries for business and work. Similarly, many Europeans have moved to Britain for job and business. Many European companies have established their headquarters in London. However, if Britain leaves the EU, there is the question of what will happen to all the EU nationals staying in Britain and vice versa. Many of them still hold the citizenship of their native countries and can’t obtain the citizenship of the country of their immigration anymore. Similarly, most European companies will have to move their offices from London to within EU and the British companies will have to move out of EU.

Impact on India in terms of Trade and Immigration

Britain had invited immigrants from India and also gave billions of Pounds as aid to India during its decades of EU members. However, it was bound to give a priority to the EU citizens in jobs and in business aspects. Because of this, many Indian immigrants – till they received citizenship of Britain – which was a slow process, were not able to find work commensurate with their qualifications in the UK and also found it quite expensive to establish businesses there because at every stage they competed with the EU nationals. Because of this, many of their business and work sectors remained tied to the South Asian Diaspora in Britain, such as running Indian restaurants, catering to the treatment of South Asian patients, bringing Indian dresses to sell to the South Asian population there, teaching Indian languages to the children of the immigrants and so on. The only other options they had were to engage in manual services such as running the lift, working as waiters in the restaurants and hairdressing shops, as construction workers and taxi drivers etc. It was only the second generation immigrants from India, who were born as British citizens there, who could really get integrated into significant British economic sectors and make an important mark there. Since they were born as British citizens, they didn’t have to compete with the EU workers and business people. This competition became so stiff that a lot of animosity against the immigrants in general and against South Asian immigrants arose in Britain and finally, Britain placed restrictions on its immigration programme for non-EU nationals after 2011. This adversely affected Indian workers and business people. They were no longer able to immigrate and work and do business in Britain freely.

In the beginning, when Britain announced its plan to exit the EU in 2019, there was a lot of excitement and euphoria in India. This is because it was expected that if Britain won’t be able to engage in free trade in EU and accept immigrants from there, then it would have to look to other countries for free trade agreements and for accepting skilled immigrants. India seemed to be emerging as one of the strongest possibilities in this realm as a trading partner of Britain with Indian nationals getting the advantage to immigrate, work and do business in Britain. However, recent developments in Britain have shown that the situation may not be as optimistic as it appears.  Following are some of the points to be remembered in this regard –

  • Britain can’t engage in a free trade talks with any non-EU nation till it exits the EU in 2019.
  • India began a free trade talk with the EU in 2007 but the progress on that front has been terribly slow. On what terms India will engage in a free trade talk with Britain will be impacted by the nature of free trade deal with the EU. This is because EU has a rule that EU countries can’t engage in free trade with non-EU nations.
  • Scotland sees leaving Brexit as a loss to itself and has voiced its intention to leave the UK and remain in the EU. Certain British political leaders have also voiced the demand that London, Oxford and Cambridge should join hands with Scotland, leave the UK and remain in the EU. There is some indication that North Ireland will also join these seceding regions and will unite with Ireland which is a member of EU. There is a strong lobby in Britain making the demand to remain in the EU. If these economically strong areas leave the UK, then India doesn’t gain much by having a deal with the remaining part of the UK, which will comprise of only small towns and countryside of England and Wales.
  • The entire situation in Britain will be clear only after Britain leaves the EU in 2019 and this means that it will take several years for India to engage in any kind of deal with Britain.
  • EU itself has become unstable because Eastern and Southern European countries are going down in economy and if they continue to decline then they’ll have to be removed from EU. This is because membership of EU requires a financial exchange which is of significant proportions. Besides, if the economically weak EU countries only send immigrants to the economically strong countries and no immigrants go to the poor EU countries then it will create an economic imbalance and the economically stronger countries stand to lose in this deal. Britain is an economically strong country. Hence, its exit from the EU will adversely affect the EU.

Concluding Remarks

From the above, it follows that if India gets into any deal with either EU or Britain in a hurry, it can suffer in the long run. Hence, any movement of free trade and immigrants from India to EU and Britain will have to be negotiated carefully and it will take many years. An added factor is that there is a rising sentiment against all immigrants in many EU countries and also in Britain. People in EU ad Britain don’t want to allow any more immigrants. British PM Theresa May belongs to the party that has strongly advocated not allowing any immigrants. In such a situation, a deal between India and Britain is not likely to come easily. Another aspect of this debate is that many leaders in Britain are arguing that Britain should withdraw its proposal to exit the EU and remain a member of the EU. If this happens, then the status quo shall be maintained and the EU nationals will keep on having advantage over Indian nationals in jobs and business sectors in Britain. In that case, there will be no scope of free trade with India.

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