Negotiating Brussels

A public affairs expert based out of Brussels looks into how Brexit would change Europe and the way Indian corporates do business in the region for 'India Global Business'. It's a popular perception that the UK's exit from the EU will lead to a more protectionist and inward-looking Europe. It's true that the UK has championed the single market and the better regulation agenda to ensure that harmonisation comes with a minimum of red tape; however, that liberalising instinct has not always been consistent. Take the UK's approach to the EU-India relationship as an example: Britain has been a major roadblock to progress on a far reaching trade deal because of its opposition to increased access for Indian IT professionals, a negotiating red line for the Indian government but a major concern for the UK. The reality of a post-Brexit Europe is more complex than it would first appear. On defence greater convergence of policy is more achievable but the EU will undoubtedly miss the UK's assertiveness in foreign policy and the diplomatic clout that comes with it. The European Commission's crusade to create a Digital Single Market will be inhibited without the voice of the UK tech sector, which leads in fintech and is the home of the largest proportion of European unicorns. Rules on streaming services, copyright and crucially data ownership, liability and localisation requirements will be decided without the UK's influence - this means that the Franco-German impulse to restrict, in particular, foreign internet-born companies is likely to predominate. With 30 per cent of revenues for India's IT outsourcing sector coming from Europe, how the continent's legal framework in respect of digital, and in particular data, is framed will have a direct impact. In financial services the EU's push for a Capital Markets Union may move faster but calls for deeper integration of the Eurozone have dampened. The prospect of treaty change and the inevitable referenda that would accompany it now looks unachievable with Brexit looming large on the horizon. Detecting an overall trend in policy as a result of Brexit is therefore a difficult exercise; however, what is certain is that German dominance of major European decisions will continue. A weak France and a distracted UK mean that this has de facto been the case in recent years. For Indian corporates this means a rethink when it comes to structures and friends. The UK takes the biggest share of Indian-sourced FDI in Europe and is home to a number of Indian companies that use it as a base to enter the rest of the EU. Future regulatory divergence and the legal complications that go with that mean that this structure will need to be rethought. Both the Netherlands and Germany have been growing their share of Indian FDI and this trend should now accelerate. An eye on the growing political importance of Germany, even after elections later this year, has to be a factor which increases its attractiveness as an investment location. Kieran O'Keeffe is a partner at the Interel Group, a global public affairs consultancy, where he works with a range of multinational companies and trade associations providing strategic advice on every aspect of European affairs. He was previously head of European affairs for the British Chambers of Commerce (BCC) and opened the association's first Brussels office in 2008.