With EU, including the UK, claiming one-fifth of India’s engineering exports to top 25 destinations, any upheaval following Brexit would have an impact on the exporters who are already in a state of distress, an EEPC India analysis has shown.
As per the latest data , India’s total engineering exports to top 25 destinations which account for 75% of the country’s total engineering product shipments aggregated to $7.6 billion for the April-May period of the current fiscal.
Of this, the EU members contributed $1.5 billion with the UK emerging as the number one destination among the EU members, followed by Germany, the EEPC India paper noted. “Seven of our 25 destinations are from EU. So, any upheaval in the entire market as a result of the political division with wide economic ramifications on the trade, investment and currency movement should be a cause of worry for us,” Chairman of the EEPC India T S Bhasin said.
He said, though a two-year window of negotiations for the exit of UK is available, the current indications point towards extreme political stand by a divided British polity and the EU leadership. India’s engineering exports to UK for the period under review were $372 million and for Germany, the shipments amounted to $339 million.
The other major trading partners are Italy with engineering shipments of $253 million, France $191 million, the Netherlands $141 million, Spain and Belgium $121 million each.
‘Brexit to affect global economy’
Britain’s decision to leave the European Union has created “significant uncertainty” that will have repercussions not only for the UK and Europe, but also for the global economy, the International Monetary Fund has warned. IMF spokesperson Gerry Rice said the Brexit was likely to cause a dampening of growth in the near term, and urged policy makers to act decisively while dealing with the situation.
"Brexit has created significant uncertainty, and we believe this is likely to dampen growth in the near term, particularly in the UK, but with repercussions also for Europe and the global economy," he said yesterday.
Rice said policy makers needed to stand ready to act, if the impact of financial market turbulence and higher uncertainty threaten to materially weaken the global outlook, adding that "decisive policies will make a difference."
"Prolonged periods of uncertainty and associated declines in consumer and business confidence would mean even lower growth and again, policymakers in the UK and the EU have a key role to play in helping to reduce the uncertainty during this period," he said.
Rice said the IMF sees the near-term risk for the UK, the EU and the global economy arising mainly from macroeconomic and financial market impact, and a sizable increase in uncertainty, including on the political front.
"One notable source of this uncertainty concerns the terms of the future relationship between the UK and the EU, and these relate to questions about how long it will take to decide those terms, how the new relationship will impact business, and other actors," he said.
The IMF has encouraged both the UK and the EU to work collaboratively toward a smooth and predictable transition.
He said the IMF "strongly supports" the commitments made and steps taken by major central banks, including the Bank of England, the European Central Bank, the US Fed and the Bank of Japan, among others, to provide liquidity and curtail excess financial volatility.
