Brexit fallout: India must build firewalls by domestic reforms, says ASSOCHAM

Britain's exit from the European Union (EU), as decided by its people, has come about as a shocker not only for global financial markets but also the political leaders across the world, throwing a huge amount of uncertainty as to which way the economic winds would blow, ASSOCHAM Secretary General Mr D S Rawat said.

"India is relatively safe thanks to its macroeconomic stability reflected by low current account deficit, comfortable foreign exchange reserves and improved GDP prospects with advancing Monsoon. However, given the heightened global risks emerging from today's event, it is time India further buffeted its domestic firewall by moving ahead with the GST Bill and other important reforms so that we remain as the most credible destination for global funds", the ASSOCHAM Secretary General said.

He said, however, since India has a huge corporate investment in the UK economy, the Indian firms with manufacturing or other facilities in Britain will have to re-align their business plans, depending on the terms of negotiations, hopefully for smooth exit of UK from the European Union.

Besides, India must also rework its trade and investment strategy for the EU in the changed circumstances and position itself as the best partner to both UK and the rest of Europe, not at the cost of the other.

In the short term, it is time to be watchful particularly with respect to the currency markets which RBI is expected to be watching proactively. As for the equity and debt markets, the best defence for India would be to move fast on domestic reforms to be able to provide a safe haven for the panicky global investors, Mr Rawat said.