With Britons voting to take their country out of the European Union will reduce the politico-economic bloc to 27 members from 28. No corner of the global financial structure will remain unscathed. Market horses like currencies, commodities and equities are the first to find their courses altered, even as economic jockeys riding them - monetary policies, bank rates and macro-economic markers - will find it hard to adapt to the altered course.

1. Brexit
With Britons voting to take their country out of the European Union will reduce the politico-
economic bloc to 27 members from 28. No corner of the global financial structure will remain
unscathed. Market horses like currencies, commodities and equities are the first to find their
courses altered, even as economic jockeys riding them - monetary policies, bank rates and
macro-economic markers - will find it hard to adapt to the altered course.
What is Brexit?
 A referendum held on Thursday, June 23, to decide whether Britain should exit (Britain's
exit, hence the term Brexit) or remain in the European Union.
 Referendum are votes in which everyone (or nearly everyone) of voting age can take part,
normally giving a 'Yes' or 'No' answer to a question. The side which gets more than half
of all votes cast is declared a winner.
 All British, Irish and Commonwealth citizens over 18 who were resident in the UK,
along with UK nationals living abroad who had been on the electoral register in the UK
in the past 15 years could vote.
 Prime Minister David Cameron had promised to hold a referendum for Brexit if he won
the 2015 general election, which he did, in response to growing calls from his own
Conservative MPs and the UK Independence Party (UKIP), who argued that Britain had
not had a say since 1975, when it voted to stay in the EU in a referendum.
The 'Stay' vote
Through January and February David Cameron had sought an agreement with other EU leaders
to change the terms of Britain's EU membership. This deal would have taken effect if Britons
voted for 'stay', and would have given Britain special status within the 28-nation club.
Cameron lead the campaign for 'stay' vote. The UK had been enjoying long-term economic
benefits from being part of one of world's largest free-trade zones. The process of leaving the EU
could be highly disruptive, leading to short-term but intense economic pain.
Migrant welfare payments: Cameron said cutting the amount of benefits for low paid migrant
workers from EU nations would dissuade them from flocking to UK in large numbers. Migrant
workers, however, would have still been able to send child benefit payments back to their home
country

2. Keeping the pound: Cameron had said that Britain will never join the euro and had secured
assurances that the euro zone countries will not discriminate against Britain for having a its own
currency
Protection for London's biz: Safeguards for Britain's large financial services industry to
prevent euro zone regulations being imposed on it
Running its own affairs: For the first time, there would have been a clear commitment that
Britain was not part of a move towards 'ever closer union' with other EU member states - one
of the core principles of the EU
The 'leave' vote
Britain's exit from EU will have major repercussions for Britain, EU as well as economies across
the world.
Increased paperwork: EU citizens in Britain and Brits living in other EU nations would have to
update their immigration statuses. Companies operating in both the UK and the EU would have
to verify that they're compliant with two sets of laws.
Blow to UK economy: The UK government estimates say that Brexit could cause the country's
economy to be between 3.8 and 7.5 per cent smaller by 2030
Threat to UK's 'united' status: Jacob Funk Kirkegaard, an economist at the Peterson Institute
for International says Brexit could encourage England, Wales, Scotland, or Northern Ireland to
appeal for quitting United Kingdom
Ripple effect for global economy: The United States will bear the major brunt of a Brexit being
UK's biggest trading partner. President Obama has warned that it could take 10 years for Britain
to negotiate a new trade deal with the US Goldman Sachs, JP Morgan, Morgan Stanley and
Citigroup together have contributed to the anti-Brexit campaign.
The Indian angle: With EU losing one of its members, India too can feel singed
 Rupee may depreciate because of the double effect of foreign fund outflow and dollar rise
 This will increase petrol and diesel prices to an extent
 The government then may want to reduce additional excise duty imposed on fuel when it
was on a downward
trajectory. This will increase fiscal deficit, unless revenue increased
 Prices of gold, electronic goods, among others will increase
 Cheaper rupee will make Indian exports, including IT and ITeS, competitive

3. British exit will also lead to greater investments into less risky assets like gold and increase
the overall outflows from the domestic equity markets. HowBrexit will impact India
and its markets
Market benchmark Sensex tanked over 1,000 points on Friday as UK's vote to exit European
Union sent financial markets into a tailspin, eroding nearly Rs 4 lakh crore from the investors'
wealth held in stocks.
Rupee also fell past 68 Vs US dollar, though the government and RBI sought to play a brave
face saying the fall in Indian currency was relatively moderate in comparison to many other
currencies globally. Meanwhile, domestic investors are concerned about the direct negative
impact that some of the India-based companies and sectors that have investments and exposure
to Britain will suffer.
According to Jimeet Modi, CEO, SAMCO securities, after some stability that will come in next
week, investors should lap up good quality stocks which will be available at good prices.
"IT & other companies which have significant revenues from Europe and UK will be
affected … as the extent to which the Pound will be impacted will be unknown. ..Indian
consumer goods … can lead to good returns for investors,” he said.
Indian IT companies get anywhere from 6-18 percent of their revenues from the UK. The UK
has traditionally been the gateway for Indian IT firms to enter Europe and they have set up a
large presence in the UK to serve the EU markets from their headquarters in London.
"Consequently, a negative implication of Brexit is that Indian IT companies may need to
establish separate headquarters/operations for EU, leading to disinvestment from the UK and
diversion of activity from the UK to EU," Nasscom said.
Also, the immediate fallout of Brexit on the IT industry in India would be the impact of the
decline in the value of the British pound, which would render many existing contracts
losing propositions unless they are re-negotiated.
However, in the longer run, Brexit could help strengthen India-UK economic relationship as the
UK seeks to compensate for loss of preferential access to EU markets.
"India's focus on innovation, entrepreneurship and high-end work renders it a very
attractive destination from a talent standpoint and equally in terms of market access. This
could work to the benefit of the IT sector in India since the UK currently accounts for
about 17 percent of India's IT exports worldwide," it said.

4. Tata Motors-owned Jaguar Land Rover (JLR) has reportedly predicted an estimated 1
billion pounds loss by 2020 post Britain's exit from the European Union (EU).
Europe represented 24 percent of the total sales of 521,571 vehicles, making it the single biggest
market for the company, ahead of the UK at 20 percent.
The British exit will also lead to greater investments into less risky assets like gold and
increase the overall outflows from the domestic equity markets.
Meanwhile, gold rallied the most since the 2008 global financial crisis today as Britain`s vote to
leave the European Union, forcing a sell-off in risky assets and a rush to safe havens.
At domestic front, gold prices also breached the Rs 32,000 per 10 gram mark by climbing Rs
2,000 per 10 gram in futures trade.
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, as per CII.
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, CII report added.
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.
As per data with the Commerce and Industry Ministry, India's bilateral trade with Britain was
worth USD 14.02 billion in 2015-16, out of which USD 8.83 billion was in exports and USD
5.19 was in imports. The trade balance thus was a positive USD 3,64 billion.
This apart, the country brief of India's Ministry of External Affairs says Britain is also the third
largest investor in India after Mauritius and Singapore, with a cumulative inward flow of USD
22.56 billion between April 2000 and September 2015.
An exit of Britain from the European Union, will create a lot of uncertainty within Europe,
but can open up opportunities for India, says an SBI research report
Brexit may actually strengthen India's position as a truncated EU may have to rework its
negotiation strategy in order to gain market access.
From an India point of view, it is also necessary to appreciate that post Brexit, it is unlikely that
UK financial market and its financial expertise will evaporate overnight.
According to SBI, there is one visible fallout of this referendum -- it does put a question mark on
the future of Indo-EU Free Trade Agreement.

5. RELATED CONCERNS
In the letter to his colleagues on Saturday Rajan made reference to the upcoming referendum in
Britain.
"Colleagues, we have worked with the government over the last three years to create a platform
of macroeconomic and institutional stability. I am sure the work we have done will enable us to
ride out imminent sources of market volatility like the threat of Brexit," he said.
"It is expected that the market would remain a little volatile due to the global events. Brexit is
expected to heighten global volatility, thereby impacting capital flows at home," D.K. Aggarwal,
Chairman and Managing Director, SMC Investments and Advisors, told IANS.
Minister of State for Finance Jayant Sinha has said the government is assessing the possible
fallouts of Brexit.
"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," said Chandrajit Banerjee, director general of Confederation of Indian
Industry (CII).
"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," he added.
A. Didar Singh, secretary general, of industry chamber Ficci has said: "We firmly believe that
leaving the EU would create considerable uncertainty for Indian businesses engaged with UK
and would possibly have an adverse impact on investment and movement of professionals to the
UK."