Major Indian firms may be hit due to Brexit: CLSA

The Dollar Business Bureau 

As the concerns of Britain’s exit (termed Brexit) from the European Union (EU) are cooling down, some Indian companies are going to be impacted, due to their exposure to the EU and UK, apart from the consequences on the global markets.

According to CLSA, Asia's leading independent brokerage and investment group, the EU - including the UK - is largest trading partner of India, accounting to 18 percent of merchandise exports in 2015-16, worth around $48 billion and 17 percent of merchandise imports valued about $65 billion.

A report by CLSA released on June 16 highlighted that trade with the UK stood at $9 billion, or 8 percent of the overall trade with the EU. Engineering goods and textiles were the largest exports from India to the EU as well as the UK, whereas the major imports were machinery and automobiles.

Around 25 percent of $82 billion software exports from India in the financial year 2014-15 were to the EU region, with the UK alone accounted for $10 billion, the report said.

CLSA said that the companies, which are having substantial revenues dependent on the UK or the EU market, or their presence in the country could be impacted, if the UK people decided to exit the EU at a crucial referendum to be held on June 23.

CLSA also highlighted that the Indian companies with significant exposures to the EU and the UK that can experience the impact include Tata Steel Ltd, Tata Motors Ltd, Bharat Forge Ltd, and Motherson Sumi Systems Ltd.

In addition, Aluminum producer Hindalco Ltd, Tata Consultancy Services, Infosys, HCL Technologies, Tech Mahindra and Mindtree, which attract revenues from the EU, are also at risk from Brexit, according to CLSA.

The impact of Brexit would be manifold for companies like Tata Steel, which are operating in the UK, the report noted.