How Brexit Might Adversely Affect The Recruitment & Economic Scenario For India
The biggest news this week could possibly be the hanging question of Britain’s membership in the European Union — something that has been coined as #Brexit and flashed repeatedly across news channels and social media. The burning question, of course, is whether it makes sense for Britain to leave EU at a juncture when the global economy is already teetering on the brink of a slowdown; the European economy being more so. Several graphics on a lighter vein have also been making the rounds, such as the one below.
And this enterprising one here.
The Brexit Background
The Brexit Effect on India
A global economy means that the trickle down effect from a high stakes referendum such as this one affects the Indian economy as a whole, and not just the status of Chicken Tikka Masala in the UK. Here’s how things will change for India, at a glance, as shown through a Moneycontrol infographic.
1. Indian FDI to UK
With the total inflow of Indian money to UK being pegged at $2.75 billion, the impact from Brexit will be felt across 800+ Indian companies in UK. Several projects floated by such companies will be hit, and the compliance costs that are levied in UK will increase, reducing the capital inflows for completion of such projects.
2. Bilateral trade
A renegotiation of various deals amounting to $14.02 billion of bilateral trade is in the cards. The restrictive EU clauses will hopefully give way to better deals with UK, though that remains to be seen.
3. Education and Immigration
An exit from the EU would also reflect on the already restrictive immigration levels of UK. Free movement of students, professors, tourists and workers would be hit as a country already split on the status of nationals of a foreign descent become more hostile. Currently, around 18,000+ Indian students pursue higher studies in the UK, but has seen an 18% drop in enrollment year on year.
Currency and employment
A further drilldown on the cascading effect of a Brexit threatens to derail the IT sector and money being remitted to India, as depicted in this infographic by Newsflicks.
1. Job creation and recruitment
IT companies such as Infosys, Wipro, Tech Mahindra and TCS will see a significant tumble in their earnings. with upto 14% of their revenue being exposed to their UK businesses. These companies might take a hit of close to 3–8% in their profits.
Around 110,000 jobs that have been created due to the presence of close to 800 businesses in India directly or indirectly are poised to be hit. This will further have a detrimental effect on the overall job creation, irrespective of descent or skills.
The financial year 2015–2016 saw a remittance of $3.6 billion to India. Since British pound will depreciate following the Brexit, this number will further decrease. This will lead to a reduction in job creation and the money spent here in India.
What the future holds
Several economic bodies and forums have professed the idea that a Brexit might mean the inevitable collapse of the European Union itself. The yearly contribution from Britain to the European Union stands at around $190 billion, and with several countries in the European Union already facing a severe economic crisis, a huge question mark looms over the competitiveness of the European markets. Several countries, of which India is also a part, have expressed their hope that Britain remains within the fold of the European Union.
The real impact of a Brexit will only unfold with the passage of time, if in fact it does end up happening. All we can do is not run around or conjecture like Nigel Farage’s chickens!
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Originally published at Aasaanjobs Official Blog.