More risks from Brexit than perceived: ASSOCHAM

The Dollar Business Bureau

The Indian government should intensify its observation on the current political-economic situation in Europe, Associated Chambers of Commerce and Industry of India (ASSOCHAM) said, as the risks from Brexit are going to be more severe than perceived in the beginning. The industry body urges the government to set up a monitoring group to study the risks to the world economy as well as to India from Brexit.

India’s exports have come down continuously for over 18 months, and any escalation from here would be mainly due to the impact of a lower base. ASSOCHAM Secretary General D S Rawat said that India must keep an eagle eye on countries like China as they may tweak the value of their currencies to increase the exports to the European Union (EU). This may bring a miserable situation to Indian exports because EU is the country’s largest partner in trade, he said.

ASSOCHAM has released a status paper after an assessment made by its leaders in the EU headquarters in Brussels, UK, Germany, France and Italy. The chamber has suggested a wider watch on the scenario, and asked the Indian government not to be satisfied with the strong fundamentals of the economy.

According to the paper released by ASSOCHAM, the damage from Brexit is not just confined to the international economy and the sentiments of the stock market. The problems would increase with the political divide between Britain and the EU countries. There could also be similar problems within UK. In such situations, the global economy on the whole may be at risk. The damage is not restricted to some sectors alone, it said.

Assocham also states that the situation is not just confined to the increase and decrease of pound sterling and euro against the US dollar, but has gone beyond it. This would impact not only on the currency valuations but also on the Indian companies doing trade with European countries. As the market sentiments get hurt, there would be an interruption in the flow of investments. Any further outcome may devastate global trade as well as investments.