As promised, here I am with the last, more analytical part of my hypotheses for Brexit outcomes. Again my usual disclaimer that if you are completely clueless, you can start off with parts 1 and 2 of this series from my home page.
Now without any further preambles, let's hop right to it.
1) Need for talented labour in the UK
Britain will need a steady inflow of
talented labour, and India fits the bill perfectly due to its English speaking population.
2) Global Market Fluctuations
The fall in prices of commodities like crude will help India save a lot on its import 'bill'. Every one dollar drop in crude prices leads to roughly 1 billion dollars of savings in India's oil import bill. This in return reduces the national trade and current account deficits.
3) Drop in Commodity Prices
Brexit would weaken global growth and lead to a meaningful decline in commodity prices. This is only going to enhance both the relative and absolute appeal of India. Lower commodity prices will help the macro fundamentals; be it fiscal deficit or current account deficit of inflation. This will only give the government more levers to pump up the investment cycle.
4) Global trading partners with the UK may feel the brunt of Brexit
Remittance to the UK from outside in terms of the Pound will fetch lesser returns compared to the past. Export dominated countries may be affected, regardless of whether or not they directly export to the UK or not. On the other hand countries which do have the UK as a major trading partner will feel a much harsher effect.
5) Impact on global powerhouses
The United States will bear the major brunt of Brexit, being the UK's biggest trading partner. Brexit would likely cause any Dollar value rise to play out. This may cause other currencies to decline in value.
A direct impact on Asian economies is unlikely in the long run; this is because exports to the UK are less than 2% of the GDP for most economies.
However, businesses in some major economies may be hit. In India and Japan, companies which have set up operations in the UK with the intention of gaining access to markets will be affected adversely.
Now...
Is India ready to handle Brexit?
The finance ministry has stated that India has sufficient foreign exchange reserves to handle any impact. However, I have my own theories. If you're interested then I shall upload a video talking about the same within the next 10 days. Subscribe to stay updated on the same!