Orient Craft, an Indian company exporting to retailers such as Marks and Spencer in Britain, says it is deeply worried about the upcoming June 23 referendum that will decide whether Britain exits the European Union.
Nearly one-third of its total apparel exports are destined for Britain and Europe. And many other Indian companies are expressing similar concerns over the upcoming vote.
However company Chairman Sudhir Dhingra points out the United Kingdom (UK) by itself is a very small market compared to the rest of Europe.
“I feel very certain that our businesses in [the] UK will definitely decline and our customers who enjoy good market share will also suffer, and if they suffer, we will also suffer. So I am very anxious,” he said.
Due to the deep historical links between the two countries, Britain has served for decades as the gateway to Europe for Indian businessmen. Calling London “the number one place” for those wanting to establish offices and businesses in Europe, Dhingra points out that, “it clearly has lot of pluses in terms of the law, the judicial system, taxation, the language above all.”
In recent years, a fast-growing domestic economy has put more money in the pockets of Indian business magnates as their investments in Britain have grown in scale and size, making India the third largest foreign direct investor behind the United States and France. In 2014, Indian investment in Britain increased by as much as 64 percent.
But the Federation of Indian Chambers of Commerce and Industry warns the flow of these investments will suffer if Britain chooses to leave the European Union as this will create uncertainty for Indian businesses.
Gurcharan Das, an author and former corporate leader, is categorical that the loss of Europe would outweigh any possible benefits in the minds of Indian investors.
“One of the attractions of investing in Britain, is that you get the whole European Union market along with Britain. If Britain exits from EU, the path to the rest of Europe becomes less clear,” he said.
There are about 800 Indian-owned businesses in Britain. The biggest presence is that of the Indian conglomerate Tatas, which owns the huge car manufacturing company Jaguar Land Rover, Tetley Tea and a troubled steel business, which it is selling. According to estimates, Indian businesses in Britain have helped create 110,000 jobs in the country.
On a visit to London last November, Indian Prime Minister Narendra Modi told the British parliament that India invests more in Britain than in the rest of the European Union.
Arpita Mukherjee at the Indian Council for Research in International Economic Relations said one of the major advantages enjoyed by Indian businesses with UK subsidiaries is the free trade agreements that the European Union has signed with a host of countries.
“If [the] UK moves out of the European Union, then [the] UK will also not have access to all these benefits that these trade agreements offer with other countries. Therefore these companies need to really rethink their strategies,” she said.
Closed door strategy
However while big Indian companies who use Britain as a bridge to Europe worry about its exit from EU, many small Indian businesses based in Britain and selling mainly to the domestic market feel they will benefit if the focus turns to the British economy.
“They prefer closed door, low competition, that kind of a strategy,” said Mukherjee.
It is still two months before the fate of Brexit, as it is being called, is decided. But businessmen like Dhingra are preparing to switch gears in the event that Britain leaves the European Union.
“We will have to certainly grow our penetration into Europe and other markets as well, because we have a capacity that we want to sell. So our energies will have to be focused somewhere else, which is again an uphill task, but we will do it.”
It is not just the Indian business community that is echoing concerns about Brexit. In the tourist haven of Goa, in western India, thousands of people who acquired Portuguese nationality in recent years are wondering how they will be impacted. They could do so because Goa was ruled by the Portuguese until 1961.
Most of those who have taken Portuguese citizenship have gone on to settle in Britain using EU provisions that allow them to live and work in any of the European Union’s member countries. But the Goans who have emigrated now worry that their days in Britain could be numbered if it exits the European Union.