Great Britain voted to leave the European Union (EU) early Friday morning, in what is touted as

one of the most remarkable political developments in the recent past. This decision has a global
impact and affects India too.
Here is how the Brexit affects you:
1) Rupee falls: The immediate and most obvious effect of the British decision is the fall in the
Rupee. Immediately after opening, the Indian currency fell 1per cent against the US dollar to Rs
68/$ levels. Any fall in the rupee hurts the Indian economy because of Indias significant
imports. You have to spend more to buy every US dollar. This can thus drive inflation higher too.
However, experts expect the Reserve Bank of India (RBI) to intervene in the currency markets to
halt a further rupee slide. However, the rupee appreciated 8% against the UK Pound.
2) Businesses hurt: When Britain was part of the EU, business moved freely throughout Europe.
This helped lower costs for a lot of companies. With UK exiting the EU, eventually businesses
will no longer have the freedom to seamlessly conduct business all over the European continent.
This applies to companies from outside Europe like India. Companies in India have invested
heavily in the UK. In fact, India is the second largest source of Foreign Direct Investment (FDI)
for UK. So, the decision could affect Indian companies operating in Britain.
3) Stocks fall: Markets around the world reacted on the news that UK decided to exit the EU.
Indian markets too tanked early in the trade. The Sensex gave up 1000 points while the Nifty fell
below the key 8,000 level. Shares of Tata Motors which has a significant present in the UK
through its Jaguar Land Rover division fell around 14%. However, the volatility could be
temporary. As an investor, you could consider this a buying opportunity to grab stocks trading at
cheap valuations. That said, it makes sense to only buy stocks of companies with strong
profitability.
4) IT companies to benefit: Indian IT software services companies benefit from this
development. There are two reasons for this. IT companies always benefit from a fall in the
rupee. When the rupee depreciates, they get more rupees for fewer dollars earned from clients
abroad. Secondly, a lot of systems in the UK and Europe would have to be changed because of
Brexit. For example, bank clearing systems may have to be recalibrated to take into
consideration the fact that Britain is no longer part of the EU. This means more work for Indian
IT companies and thus, higher revenues and profits.
5) Immigration control: A key difference between those who wanted UK to remain with the EU
and those who wanted to leave was on the subject of immigration. The Leave EU campaign
was anti-immigration. This means the UK could have stricter immigration policies, thus making
it difficult for all Indians aspiring to go to the UK.
6) Two years of negotiation: All said and done, the UK may have voted to leave, but its not
going to be an overnight change. The David Cameron-led UK government is likely to have a
long negotiation with the European Union that could last as long as two years to finalise the
details of the exit. These negotiations involve decisions on the continuation of benefits the UK
had when it was part of the EU. For example, if the government negotiates it right, it could

ensure free movement for its citizens through Europe. Moreover, the long period of negotiation
gives companies enough time to re-plan their businesses in the region. This will ensure the
transition is smoother and easier.
7) Contrarian view: The United Kingdom needs investors as well as skilled workers from other
countries. In itself, the economy and population is not self-sustainable. This means, the UK will
look for more trade partners now that it is out of the EU. This could be an opportunity for India
to form free-trade agreements with the country. It could also mean the UK could consider easing
immigration and business rules for Indian companies. This also presents an opportunity for
Indian students to get more scholarships. Currently, the British universities have to offer lower
Tuition fees and scholarships for European students. This could stop after the British exit,
leaving more opportunities available for Indian students.