UK to trigger Brexit tomorrow; Indian cos hope for clarity

Ever since the referendum on leaving the EU last year, the 800-odd Indian companies with UK operations — some of which act as their base for the rest of Europe — have been preparing for Britain’s exit from the union.

However, a lack of clarity on details and timing left many in an uncertain situation — unsure of what “leaving” would entail for the industry they operate in and the workforce they employ.

Over the past few months, and since the start of the year in particular, the picture of the road ahead has begun to become clearer: Britain has confirmed its intention to leave the single market and the customs union, end freedom of movement within the EU, and avoid a long running transitional programme.

Following the successful passage of the authorising legislation through Parliament earlier this month, Brexit is set to be triggered on Wednesday, March 29, the government has announced, with a meeting of the heads of the remaining 27 member states set for a month later.

Britain will have two years to negotiate a new deal with the EU — a period that could be extended on agreement with the European Council.

Britain has also indicated its eagerness to strengthen trade ties with India, including through a potential free trade agreement, discussions on which could commence after it leaves the EU.

For some companies it has been business as usual, says Ajit Mishra, co-head of the India group at London-based firm Penningtons Manches. “We have some clients making acquisitions and for them the UK is the market. There will be difficulties once Brexit is triggered but their focus is the UK. Some are increasing their investment in the UK, but have also increased investments in Germany and Eastern European countries.”

“...one of the main things we are seeing clients do is reviewing their talent and workforce plan, particularly those that are dependent on EU workers,” says Anuj Chande, London-based head of the South Asia group at consultancy Grant Thornton.

Firms in the food, drinks, healthcare and hospitality sectors would be among those most impacted, he adds. “We are already seeing some EU workers going back.”

Chande added that the IT industry was also being impacted by the nature of regulations, while the auto and auto parts sectors would be looking for clarity on the impact on their trading arrangements and suppliers. “ … we have been hearing a one-sided view on what the UK wants but we have no idea what the EU wants.”

He cited the pharmaceutical sector as another example of one that would be impacted, with the European Medicines Agency in all likelihood set to leave its headquarters in the UK following Brexit. “They are not going as far as dismantling but for future expansion they may be looking for alternatives.”

“The whole thing boils down to the certainty in the exercise, that is what firms are looking for,” says Dinesh Patnaik, Deputy High Commissioner in London, who welcomed the clarity that had already been given through Prime Minister Theresa May’s speech earlier this year, the white paper on Britain’s negotiation plans and the setting of the date for talks.

“Companies are talking to recruitment agencies, they are looking at locations, they are looking at other issues, but do they have a blue print,” says Mishra. “Many of them don’t. They are waiting for Article 50 to be invoked.”