In a post-Brexit world, India can leverage its trading relationship with EU

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Published: April 16, 2019 12:21:43 AM

In a post-Brexit world, India can leverage its trading relationship with the EU, and also lead the Commonwealth

The economic impact of Brexit on India could be substantial—and in a good way. The economic impact of Brexit on India could be substantial—and in a good way.

Vox Populi, Vox Dei’ is Latin for “the voice of the people is the voice of God”—a basic tenet for liberal democracies, it faces a rare chaotic crisis in the hands of the British Parliament. The bold voice of the British electorate—which approved leaving the European Union (EU) in a 2016 referendum—being ignored at worst or re-examined at best (with the proposal of a second referendum). It is heartening to see the ‘Mother of all Parliaments’ being reduced to a callous self of her former glory. Its constitutional sovereignty being held hostage to the human emotions of its members. But should we find the core of the Brexit chaos at the doorstep of the British Parliament or do the British people share some of that blame?

After the 2016 referendum, the British, in a 2017 snap-general election, elected a minority conservative government, consisting of a Prime Minister and her Cabinet filled with politicians who had voted to ‘remain’ at the 2016 referendum, to deliver the Brexit mandate. A textbook case of the inevitable flaw with a Westminster-style indirect democracy. For the system to work, the majority will of a nation must translate into majority in Parliament, with the government tasked to implement the ‘majority will’ or mandate after balancing it with what is in the best interest of the nation. The glaring forking of democracy’s two conflicting imperatives of combing majority rule with liberal values of universal rights and common good. The Brexit chaos now threatens a break-up of the two national parties of Britain—the Tory and Labour parties. The House of Commons has already seen the emergence of new caucus groups to accommodate disgruntled members of major political parties—Brexit succeeding to create a fractured and divided British Parliament and society.

But what is new to Britain has been rehearsed often in Indian Parliament. For nearly three decades (before the 2014 federal elections), the Lok Sabha experienced coalition governments and a chaotic region/language/caste-based governance model. Despite initiating liberalisation reforms in 1991, Harvard University’s Center for International Development working paper (in 2002), analysing the first decade of India’s liberalisation efforts, concluded that India’s reform efforts were an ‘unfinished agenda’ and that India, during this decade, did little: to reduce fiscal deficit, to reduce government dissaving (mainly explicit and implicit subsidies), to privatise India’s non-performing state-owned enterprises, to reduce barrier to FDI (as contrasted to most of the fast-growing Asian economies), besides failing to initiate major labour and land-acquisition reforms. Six governments were in office during the 1990s—from being in office for 16 days, to two successive minority governments lasting less than a year.

Such Indian coalition governments, scrambling for allies to help form and then retain majority in Parliament, built on compromised self-interested of party politics, did little to further any national cause of economic reform, geopolitical leadership or augment military capabilities. Brexit demonstrates a similar moment for British politics, where factionalised political and party interests have overpowered the cause of the British nation and of its people. Just like the idea of ‘Many Indias’, formed by merging autonomous principalities into a unified state, has fractured its Parliament, the reality of ‘Many Britons’, based on its differing understanding and imagination of its current and future roles within Europe, threatens to break up its Parliament and society. An advice from one Commonwealth nation to another—learn from the lessons of India.

The economic impact of Brexit on India could be substantial—and in a good way. Despite the EU being India’s largest trading partner, accounting for 13% of India’s total trade in goods in 2017, the EU and India have not being able to secure an FTA, even after 16 rounds of negotiations, from 2003 to 2018. News from Brussels seems to suggest that without Britain, such talks could be more successful. Britain was concerned that a more liberal visa regime—one of India’s priorities—would bring a disproportionate amount of Indian workers on its shores. Sunil Prasad, the Secretary-General of the Europe India Chamber of Commerce, said: “Most Indian companies used to go to Britain as their point of entry into Europe.” With Britain’s India red-line removed, India and the EU should be more comfortable in concluding the FTA after 15 years since the talks began.

‘Global Britain’ is the catchphrase of the current British government—a governing idea that once Britain manages to finally cast off the EU’s yoke, it will be able to strike its own trade deals with countries. Such a vision inevitably places India high up on Briton’s wish list. The first country outside of Europe that PM May visited in November 2016 was India. The jewel in the post-Brexit crown? In a post-Brexit world, India has a unique opportunity of leveraging its trading relationship with the EU and links to the fraternity of the Commonwealth nations to get a better trade deal with both the EU and Britain. It will not be easy, but it will now be possible.

Finally, the cultural lessons of Brexit on India are equally profound. In January 2019, PricewaterhouseCoopers reported India would officially surpass Britain in world’s largest economy rankings in 2019. For the first time in more than 200 years, India will economically be more important than its colonial master. A profound landmark of the ensuing Asian century.

Although the Indian economy was originally predicted to overtake the British GDP in 2020, the surpasso has been accelerated by nearly a 20% decline in the value of the pound sterling since the Brexit chaos came to order. As the only former British colony to surpass its colonial master on the global economic platform, without gloating, India seems perched to lead the Commonwealth both officially and unofficially, being the chair-in-office of the Commonwealth till the next summit in Rwanda in 2020.

The author is Associate professor, Jindal Global Law School

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