Here's a low down on what Brexit means for India and how the country is dealing

with it:
India-UK connection: A note by Deloitte in May said India is the third largest
source of FDI to the UK in terms of numbers of projects, with 122 projects
encompassing inward investment in the last financial year, an increase of 65 percent
from the previous year, which lead to the creation of 7,730 jobs and protection of
1,620 jobs. According to the consultancy firm, key sectors attracting Indian
investment include healthcare, agritech, food, and drink. "There are an estimated
800 Indian owned businesses in the UK, including companies like Tata Motors, with
more than 110,000 employees. Further, the UK is also Indias largest G20 investor,"
it said.
IANS, meanwhile, says that Britain ranks 12th in terms of India's bilateral trade with
individual countries. It is also among just seven in 25 top countries with which India
enjoys a trade surplus.
"India invests more in the UK than in the rest of Europe combined, emerging as the
UK's third largest FDI investor. Access to European markets is therefore a key driver
for Indian companies coming to the UK. Anything that lessens this attractiveness
may have a bearing on future investment decisions. It is important also to ensure
continued border-free access to the rest of Europe for the many hundreds of existing
Indian firms that have base in the UK," Chandrajit Banerjee, director general of
Confederation of Indian Industry (CII) has been quoted as saying in the IANS report.
So clearly, India will see a major impact, if the UK indeed decides to leave the EU.
Forex outflow: One of the major impact is going to be the outflow of dollars. If the
UK decides to exit, foreign funds are likely to move out of the riskier markets like
India. What is required in such a scenario is forex reserves. India's foreign exchange
reserves hit a record high at $363.46 billion for the week ended 3 June.
The finance ministry said on Wednesday the country has sufficient foreign exchange
reserves to handle any impact. RBI Governor Raghuram Rajan said the central bank

will infuse whatever liquidity is needed into the Indian market to keep it "well
behaved".
On Monday, after RBI governor Raghuram Rajan made his intention clear that he
wouldn't serve a second term at the central bank, the rupee had fallen to a month
low. The RBI's intervention by selling dollars had averted a deeper decline. However,
many analysts expect the rupee to decline further.
"We expect the RBI intervention to smooth any INR volatility. In case of BREXIT
later this week, it would likely allow any US Dollar strength to play out. Our Asia FX
strategists expect the INR to depreciate to Rs 68.5/USD in September from
Rs67.3/USD today," Bank of America Merill Lynch said on Monday.
Impact on companies: Nasscom recently said a Brexit will have a negative impact
on the $108 billion Indian IT sector in the short term. However, it said the exact
nature and extent of the impact will emerge over a longer period of two years or
more.
"An initial analysis indicates that the impact on India's technology sector may be
mixed; clearly negative in the short term and harder to discern in the longer term
with either scenario having some positive and some negative points," Nasscom said.
However, leading IT firms such as TCS, Infosys, Wipro and HCL Technologies have
not commented on the issue yet. Tech Mahindra, meanwhile, said the company will
"wait and see what the outcome of the referendum is" and then assess the situation.
With the pound expected to fall 20 percent in case of a Brexit, Indian companies with
sizeable presence in the UK will have to bear the brunt.
A report in the Deccan Chronicle says the stocks that would face turmoil include that
of Tata Steel, Tata Motors, Tech Mahindra, Bharat Forge, Motherson Sumi, Infosys.
Hindalco, Wockhardt and Mindtree. Apart from these, the Indian Depository
Receipts of StanChart are also likely to get impacted negatively.

Jaguar Land Rover, Britain's biggest carmaker and Tata Motors subsidiary, estimates
its annual profit could be cut by 1 billion pounds or $1.47 billion by the end of the
decade if Britain leaves the European Union, said a Reuters report.
As Deloitte explains in the note, one of the key factors, among others, that attracts
Indian enterprises and their investment into the UK is the gateway that it provides to
the EU.
"Majority of Indian businesses chose to locate their European offices in the UK, to
gain the ease of operating in the UK and avail the benefits while still remaining a part
of Europe. Removing this gateway would be problematic for Indian businesses in the
UK, who may choose to relocate and direct investment someplace else," it said.
Sebi's preparedness: Sebi and stock exchanges have beefed up their surveillance
mechanism to deal with any excessive volatility. The domestic capital market has a
robust surveillance and risk management framework in place and it has been beefed
up to deal with any eventuality emanating from the 'Brexit' referendum, a senior
official said.
The official said Sebi and the bourses would keep a close tab on manipulators looking
to exploit the volatile trends expected in stocks and derivatives, including those
linked to the rupee's movement against other foreign currencies. A strict vigil would
also be kept on brokers, portfolio managers and other market intermediaries for any
attempts to lure small retail investors into promises of hefty gains from the futures
and options trading, especially in banking stocks and indices, the official added.

This is how 'Brexit' is going to hit our stocks, rupee and the economy
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NEW DELHI: The next big event risk before equity investors across the globe, including those of India, is the
'Brexit' referendum.
The United Kingdom will hold the referendum on June 23 to decide whether Britain should stay with the EU or
not. Some analysts say this would be the most important global event this year.

A 'Leave' mandate can hold profound implications for various economies in Europe and for countries with which
Europe shares deeper trade relations. However a 'Remain' vote will keep things steady and boost risk-on
sentiment.
Although recent polls indicated that the wind was shifting in favour of a 'Remain' vote, it's still too close a call.
From India's point of view, Brexit is important because besides sharing trade relations, EU is India's largest single
export market. With a population of around half a billion, the European economy is worth $16 trillion, which is
equivalent to one-fourth of global GDP.
Data with the Commerce and Industry Ministry shows India's bilateral trade with Britain stood at $14.02 billion in
2015-16, out of which $8.83 billion was in exports and $5.19 was in imports. The trade balance thus was a
positive $3.64 billion.
Exports to the UK presently account for 0.7 per cent of Asian countries' GDP. Some studies estimated that a
Brexit would reduce British imports by 25 per cent worldwide within two years.
Only a few economies in Asia would see a noticeable effect on growth. China's exports to the U.K. are equivalent
to just 0.5 per cent of Chinese GDP. London-based Capital Economics says a Brexit would cause at the most a
GDP drop of 0.2 per cent across Asia.
No risk analysis can precise estimate the exact consequences should the British decide to part ways with the EU.
But the impact will surely be deeper across financial markets, be it equities, currencies or bonds.
Currencies: Pound can tumble 12%, Rupee to weaken
The health of an economy directly reflects on the state of its currency. A possible Brexit could be grave for the
British economy, which is estimated to shrink 6 per cent in about 15 years.

"The country's GDP could well decline by 3.6 per cent after two years, inflation (CPI) can be higher by 2.3 per
cent than the current levels, unemployment rate can increase by 160 basis points, average real wages can
contract by 2.8 per cent, house prices can deflate by 10 per cent and pound can tumble by 12 per cent," IIFL said
in a report.
In the short run, it could trigger flight of capital from Britain, which could strengthen the dollar in the short term. A
strong dollar would pould push the rupee towards 70 level, experts said.
"We are going to see a lot of volatility in the pound as well as for the euro, and possibly that will create greater
demand for safe haven currencies -- the yen and the dollar - making them appreciate against the wider basket,"
Aditi Nayar, Senior Economist, ICRA, said in an interview with ET Now.

"Given that, the emerging markets currencies would come under some pressure and the rupee is not going to
escape that volatility," she said.
"We have a broad range for the rupee for the year between 66.5 and 69.5 levels to the dollar," Nayar said.

The British exit will impact exports to Europe, which will get affected also due to a devaluation of the euro and the
pound.
Companies like Tata Motors, Tata Steel, Hindalco and a host of Indian pharma companies will also get impacted
due to major currency fluctuations.

Equity markets:
India is not decoupled from the rest of the globe and there will be collateral damage should a Brexit verdict

triggers a selloff in emerging markets, which India is part of. The event would lead to a change in strategy for
most money managers, shifting their preference from equity towards safe havens such as gold.
The intensity of the damage because of a possible Brexit could be high, but it will not be permanent. Most
analysts expect a maximum of kneejerk reaction in the domestic market after which investors will return to the
market once the dust settles.
"If there is a Brexit, risk-off trade will kick in, especially because of currency volatility. A risk-off trade may lead to
some money going out of emerging markets, including India," said Sashi Krishnan, Chief Investment Officer, Birla
Sun Life Insurance.
A weaker rupee can further erode returns for the foreign investors, making them to cash out of the domestic
market.
"I would think going into the vote, people are reducing their exposure to emerging markets, but I think a lot of
these fears will sort of even out after the event," he added.
Krishnan said any correction because of Brexit will be an opportunity to take exposure in domestic equities,
especially the cyclical or consumption-related stocks.
Fund outflow is a risk:
Brexit will lead to capital outflows from India to a certain extent, said experts. Will that entirely damage the India
story? No.
A Brexit will also impact capital flows to India and our exports to Europe will get affected due to a weaker euro
and pound. Indian business houses have a material presence in both UK and Europe, and they will see
substantial impact due to unavoidable currency fluctuations," said Nirdosh Gaur, MD & CEO, Moneypalm.
Akash Prakash, CEO & MD, Amansa Capital said the biggest worry from a Brexit vote would be that it can open
a real can of worms, raising a question mark over hoe the European Union will function in its new avatar.
"I think the real worry on Brexit is not so much about the impact on the UK, which is of course there, but is it
about the possible beginning of disintegration of Europe, which is a much bigger worry," he added.
A 'Leave' vote would complicate matters for regional policymakers already wrestling with the euro zone's
economic crisis. "These concerns are not limited to retail players as net redemptions from Europe equity funds
YTD are now evenly split between retail and institutional investors," the report said.
The second week of June saw EPFR Global-tracked equity funds post a collective outflow of $3.6 billion while
bond funds experienced net redemptions for the first time quarter to date. Over $22 billion flowed out of the
money market funds, with the bulk getting redeemed on June 15.
Read more at:
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http://www.livemint.com/Money/iltjhLLPBTuAFyYNt3H83O/Brexits-impact-on-India-when-elephants-fight-thegrass-su.html
http://www.firstpost.com/world/brexit-as-referendum-draws-near-heres-why-india-is-on-its-toes-2851018.html

India Finance Minister Arun Jaitley said: "In this globalised world, volatility and uncertainty are
the new norms. This verdict will obviously further contribute to such volatility not least because its
full implications for the UK, Europe and the rest of the world are still uncertain. All countries
around the world will have to brace themselves for a period of possible turbulence while being
watchful about, and alert to, the referendum's medium term impacts."[4] Commerce Secretary Rita
Teaotia said: "My interest will get changed because number of tariff lines (products) will change
(now). I will calibrate and the EU will also calibrate. Now they would reassess and we will also be
going to reassess." She added that recalibration is required as some items of interest to Britain

may have to be removed. She further noted: "Brexit will not impact our trade with the UK. With
EU also, nothing directly affects our trade. In long term, we would be interested to see how UK
negotiates its exit from EU." In regards to a proposed free-trade agreement Commerce and
Industry Minister Nirmala Sitharaman said: "I would think, they (EU) would need time now to
assimilate this outcome. Once they assimilate the outcome, they will only then respond. I will talk
to my counterparts." She added: "So the impact of volatility of the currency is something which
might have an immediate impact on our exporters. We will however have to keep watching
currency based volatility, both in the short and the medium term and also look at the impact on
overall trade itself."[71] External Affairs Ministry Spokesperson Vikas Swarup said: "We have seen
the results of the British referendum on EU membership reflecting the choice made by the British
people on the issue. We value our multifaceted relationships with both the UK and the EU and
will strive to further strengthen these ties in the years ahead." [72] CIIDirector-General, Chandrajit
Bannerjee said, With Britains departure from the EU, India will have to negotiate a Free Trade
Agreement with the UK which may be easier to accomplish at a bilateral level... This could well
be the best era for our industries to collaborate.[60]