It expected the RBI to be ready with a contingency plan for effective intervention if there is a pressure on the dollar supply because of outflows of funds from the emerging markets.
“However, in the medium to long term, the funds shuffled in an uncertain Britain and European markets could find way into the Indian markets, but in the immediate term, anything can happen and as a credible economy, we have to be ready and be on top of the situation,” Assocham said, adding it has full confidence in RBI Governor Raghuram Rajan to deal with the fast unfolding global events.
When it comes to merchandise trade and foreign direct investment (FDI) , there are no big issues in the short to medium term as in the case of ‘exit’ , the Britain and EU would have to negotiate the terms of separation over a period of two years. That would give enough time to India policy makers and industry to re-align with the changing European landscape, the paper observed.
According to one school of argument, UK would find it easier to negotiate and sew up a Free Trade Agreement with India and similar arrangements with China and other fast emerging economies, unlike protracted India-EU trade negotiations stuck for over nine years without any tangible results. The India-EU trade deal is stuck also because of red tape and complicated bureaucracy and absence of convergence among different EU member countries’ interest. “On the other hand, a trade opening pact can be reached with Britain within a matter of months”, the Assocham paper said. (SH)
Fibre2Fashion News Desk – India