Year 2020 will be remembered in history for two events – one, of course, is the worldwide spread of the deadly corona virus and second, is the exit of britain from the European Union, famously called as Brexit.
This is the first time that any country has left the European Union which was formed in 1997, presenting to the world a unified Europe so that further wars due to ethinicity and economics do nt occur. In times to follow it has become a major economic and political block in world politics.
The EU has developed an internal single market through a standardised system of laws that apply in all member states in those matters, and only those matters, where members have agreed to act as one. EU policies aim to ensure the free movement of people, goods, services and capital within the internal market; enact legislation in justice and home affairs; and maintain common policies on trade, agriculture, fisheries and regional development. Passport controls have been abolished for travel within the Schengen Area. A monetary union was established in 1999, coming into full force in 2002, and is composed of 19 EU member states which use the euro currency.
Containing some 5.8% of the world population in 2020, the EU (excluding the UK) had a nominal gross domestic product (GDP) constituting approximately 18% of global nominal GDP. Additionally, all EU countries have a very high Human Development Index according to the United Nations Development Programme. In 2012, the EU was awarded the Nobel Peace Prize.
Yet, UK passed a referendum to leave the union. This had its roots in the imperial past, the clear geographic demarcation from mainland Europe and the question of sovereignty and demography.
There were rounds of talks between the two entities for an amicable way out. Finally on Christmas this year, 2020, a deal was signed. This deal lays the bare bone structure through which business will commence between UK and EU from January 1, 2021.
The deal contains new rules for how the UK and EU will live, work and trade together.
While the UK was in the EU, companies could buy and sell goods across EU borders without paying taxes and there were no limits on the amount of things which could be traded. Under the terms of the deal, that won’t change on 1 January, but to be sure that neither side has an unfair advantage, both sides had to agree to some shared rules and standards on workers’ rights, as well as many social and environmental regulations. Freedom to work and live between the UK and the EU also comes to an end, and in 2021, UK nationals will need a visa if they want to stay in the EU more than 90 days in a 180-day period.
Now that it’s no longer in the EU, the UK is free to set its own trade policy and can negotiate deals with other countries. Talks are being held with the US, Australia and New Zealand – countries that currently don’t have free trade deals with the EU.
It presents a great opportunity for India as well. Some facts that will help us in understanding the situation. India is world’s 13th largest exporter and 8th biggest importer in the world. India’s exports to EU are just 2 % of its total exports with china being the biggest with 19% share. The exports to EU from India were at $24.5 billion in 2009 which have marginally increased to $38 billion in 2019. The size of India’s economy, now the world’s fifth largest, makes it an attractive market for UK exporters. Trade between the UK and India totalled more than £20 billion in 2018.
There is a huge potential for India’s trade to grow with UK. Areas such as drugs and pharma, fintech, chemicals, defence manufacturing, food and beverages, petroleum products and natural gas are the most growth promising areas of Indian economy and have strategic competitive advantages in the international market for trade and attracting investments.
India has been working towards an FTA with the EU for some time now. It has faced major challenges from the member countries in trade of certain goods like automobiles and wines, primarily catering to the demands of Germany and France, the two major economies in the EU. BREXIT gives India the chance to deal with UK independently and forge an FTA with UK on its own terms and conditions.
India is eager to embrace the UK as a bilateral trading partner and PM Modi has admitted that he was looking forward to Prime Minister Boris Johnson’s visit to India for the Republic Day celebrations next month. Modi is also calling for an ambitious and outcome-oriented 360-degree roadmap covering trade and investment, defence and security, migration and mobility, education, energy, climate change and health, in order to tap the full potential of the bilateral relationship.
India and the UK are already working together on Covid-19 vaccine production. India’s Serum Institute will produce over a billion doses of the Covid-19 vaccine developed by Oxford University and AstraZeneca. The doses manufactured by the Serum Institute will then be distributed across the world in collaboration with the WHO and GAVI – the vaccine alliance.
PM Boris Johnson’s visit in January presents India the opportunity to take this partnership to the next level. Along with india, UK would be looking at China also and it is upto us that we can sway the business emanating from the Isles to us.