As the United Kingdom officially left EU on New Year’s Eve, what could this mean for India?

In the past, Prime Minister Narendra Modi has said that the UK is India’s entry point to the EU but the Brexit deal can affect India positively and negatively
As the United Kingdom officially left EU on New Year’s Eve, what could this mean for India?

As the clock struck 11 pm (23:00 GMT) in London on New Year’s Eve, the United Kingdom officially separated from the European Union (EU). The departure from the EU comes three-and-a-half years after the British people voted to leave the union.

The UK stopped following EU rules at 11 pm and substitute travel, trade, immigration and security cooperation arrangements came into effect. UK Prime Minister Boris Johnson has said that since the Brexit process has ended, the UK has the “freedom in our hands” and can do things “differently and better”.

However, as Indians, we may not understand as to what the Brexit deal is. Why did the UK leave the EU? How does it affect India? In this article, we are going to answer these questions.


On June 23, 2016, the UK voted to quit the EU as Britain was losing out on big deals by staying in the EU. For 47 years, the UK has been a member of the EU and the European Atomic Energy Community (EAEC). The EU is a political and economic union of 27 member states located in Europe. The UK has had troubling relations with the EU for many years.

Since voting to exit the Union, the UK has been negotiating a deal with the EU. For three-and-a-half years, the negotiations continued and were quite complex. Meanwhile, the UK and EU came into an agreement that till December 31, 2020, most things will be kept the same till they agreed on the deal. On December 24, 2020, both sides finally agreed to a deal.

In the Brexit deal, UK will be setting its own trade policies and can negotiate deals with other countries including those that don’t have free trade deals with the EU — such as the USA, Australia, and New Zealand. According to the deal, if UK citizens want to reside anywhere in the EU for more than 90 days, they will need a visa. This was not the case when the UK was a part of the EU.

Reportedly, there could be some border disruptions. The UK has said that it will be delaying paperwork checks on borders so that people can get used to the new system. However, the EU will be checking paperwork and carrying out checks at borders from the first day.

The UK and the EU still have to agree on various things and decisions still need to be made. Despite both sides agreeing to similar rules, the rules can change in the future. However, if one side objects to the changes, it can lead to disputes between the EU and the UK, thus denting relations between the two.


India is one of UK’s top investors. India has 800 firms currently present in the UK and these firms have made investments keeping in mind the European market. Before the Brexit vote, Prime Minister Narendra Modi has said that the United Kingdom is India’s entry point into the UK. However, with the Brexit deal now sealed, India could face positive and negative impacts.

The positive impact for India is that many feel that the British currency weakening is good news for India as they can end up saving a lot of money when it comes to importing. If the value of the pound falls, many Indian companies will be able to buy hi-tech assets from the UK. As mentioned above, the UK will be able to indulge in bilateral trade pacts with India, thus improving ties between the two countries. Not just from a business perspective, but from an education point of view, this is good news for many Indians students. They will able to afford higher education in Britain, as the education fee is likely to get cheaper. With the currency value falling, Indian tourists could end up paying less while visiting the UK.

The negative impact is that India will have to negotiate for new World Trade Organisation (WTO) trade terms with the UK and will have to adjust to the changes. The value of the dollar could rise and foreign funds will likely outflow, and lead to the Rupee declining. This could result in a hike in petrol and diesel prices, which are already at an all-time high comparing to the last seven years. Reportedly, prices of gold and electronic goods could also increase. We could witness the slight fall of Bombay and National Stock Exchange. For the short term, the Indian IT sector could also be affected by the Brexit.

Currently, everyone is focussing on Covid-19 pandemic and the vaccine. With India inviting UK PM Johnson as the Republic Day chief guest, India is already taking the initiative of strengthening ties between the two countries. However, only in the next few months will we know how much the Brexit is impacting India.

The NationWide