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After months of discussions with the CBEC-Service tax team, the circular clarifying the place of provision for software exports is out.


You would recall in Nov, that several service tax refunds were rejected in Mumbai, in the pretext that data, emails etc were received in India. AS NASSCOM we had representd the matter to the CBEC and Revenue and were given an assurance that the matter is being looked into. A press release reassuring that no hasty decisions will be taken was also released by the MoF.


We are extremely delighted to share that, after several interactions, where the NASSOCM team with or without Industry members, outlined typical fact patters of the contracting and development activities undertaken by the Industry, the CBEC has finally issued the circular, where they clarify that place of provision of services would be the recipient of services, thereby according export status. We hope that this clarification will put to rest the ongoing disputes and denials that companies have faced.


We welcome your feedback.


We are glad that our quiet but steadfast focus on the issue has yielded results. We continue to work for our members to ease the business environment.

The Union Budget 2018 was presented today reiterating the Government’s commitment to leverage technology and digitalization as a key for India’s development strategy across sectors. The focus on “ease of living”, will inevitably spur deployment of technology across all verticals.

Medium, Small and Micro Enterprises (MSMEs) are instrumental in providing employment to people. Proposals for reduction of income tax to 25% for companies with annual turnover upto INR 250 crore will be helpful and is in line with NASSCOM’s ask in rationalising the corporate tax rates. However there is a marginal increase in tax rate for all other companies arising out of increased Cess.

In the context of the growing Digital economy, the budget proposals include additional criteria for taxation that would be applicable to companies who may not have physical presence in India. This could be particularly relevant to the technology sector, as internet driven businesses and cloud based platforms blur geographical boundaries.

NASSCOM welcomes the announcement of a national program to direct efforts in the area of artificial intelligence, including research and development and comprehensive initiative on Cyber-physical systems. This will enable India to leapfrog in areas of emerging technologies globally.

The proposal to review the outward direct investment will be of great relevance to the IT sector as it charts its global growth trajectory.

Focus on digital payments is as per expectations. Use of block chain technology to encourage digital payments will ensure new security technologies.

The Technology sector will also see many emerging opportunities arising out of Government reliance on Technology driven development e.g. web-based Government Integrated Financial Management Information System, E-courts, E-assessments etc. It is for the Startups and Industry to exploit such opportunities and contribute to national objectives.

Some of the key announcements and their impact are summarised below:

1. There is continued reliance on technology for Governance and development. This is in line with the digital India vision, and offers opportunities for the technology sector and Startups.


  • Allocation of digital India doubled to INR 3073 crore.
  • Disposal of its business by introduction of e-office and other e-governance initiatives in Central Ministries and Departments.
  •  A web-based Government Integrated Financial Management Information System (GIFMIS), administered by Controller General of Accounts, for budgeting, accounting, expenditure and cash management for more effective fiscal management of Government.
  • Project ‘e-Vidhan’ to digitize and make the functioning of all State Legislatures paperless.
  • E-Courts, to bring about universal computerization of all Districts and Subordinate Courts, use of cloud computing and availability of e-services like e-filing and e-payments as well.

2. Certain focussed initiatives announced, that underscore the transformative impact of technology in India, and also highlights the need for technology solution for wide ranging issues.


  • Increasing use of technology for safety under railways ‘‘Fog Safe’’ and ‘‘Train Protection and Warning System’’
  • Transforming education sector – by increasing use of digital intensity in education – black board to digital-board - upgrade the skills of teachers


3. Technology - References were made to cutting edge technology areas like 5G, AI, Robotics, Quantum computing and the Government reiterated its support for Research and Development. While specific were missing, it would be important for NASSCOM and its members to work closely with the Government to shape the digital ecosystem.


  • To invest in research, training and skilling in robotics, artificial intelligence, digital manufacturing, big data analysis, quantum communication and internet of things. 
  • Department of Science & Technology will launch a Mission on Cyber Physical Systems to support establishment of centres of excellence.
  • Niti Aayog to establish a national programme to direct efforts towards Artificial Intelligence, including research and development of its applications 
  • Department of Telecom will support establishment of an indigenous 5G Test Bed at IIT, Chennai.

4. Digital Payments

The Government’s on-going focus on Digital Payments was evident, as the FM clarified the legal invalidity of cryptocurrency and commitment of the Govt. to eliminate them. Further, the Govt. confirmed that there is a group working in the Ministry of Finance on policy measures and institutional mechanism for facilitating digital payments, encourage block chain technology and creating the right environment for Fintech companies.

5. Globalization
PM in his Davos speech had referred to the “worrisome situation against globalization” – As India continues to grow, and the IT sector charts its global trajectory, policy instruments to support the journey would be essential. In this context, the proposal to review existing guidelines and processes and bring out a coherent and integrated Outward Direct Investment (ODI) policy will be important for the IT sector, as the Industry undertakes M&A, and sets up Development centers etc.

However, a key ask of the IT sector was a review of the foreign tax credit policy in India. We hope that this will also be looked into during the year.

6. Taxing Digital Economy
The budget has expanded the concept of business connection in domestic law. For a long time, nexus based on physical presence was used as a proxy to identify business connection with a country. However, in the digital economy where business models are operating remotely through the existing nexus rule is seen to be inadequate. Therefore the budget proposes that a non-resident enterprise would create a taxable presence in a country if it has sustained interaction with the economy by the aid of technology and other automated tools. Revenue factor may be used in combination to determine 'significance economic presence.

This rule could have significant impact in this era of cloud and internet enabled businesses. The chances of a foreign company constituting a BC/PE in India under the new rules proposed now, maybe higher given the extent of digitization.

7. Start-up


  • Startup India scheme extended to Startups that will be set up till March 2021, and definition harmonised with DIPP definition Startups, - definition of ‘eligible business’ for a start-up is proposed to be aligned with the modified definition notified by DIPP. It is further proposed to extend the incorporation date for a start-up for availing benefit under section 80-IAC of the Act to 31st March, 2021 from 31st March, 2019 and rationalise the condition of turnover for availing the benefit.
  • For startups, aligning the definition of start-ups with the definition of DIPP and extending the availability of start-up scheme till March 2021 is a welcome move however there is a need to relook at the requirement of Inter-Ministerial Board (IMB) certification that is required for start-ups to qualify for the tax holiday so that the benefit can be availed by many start-ups.
  • We will continue to engage with the Government to make these announcements effective and also on other unaddressed recommendations related to harnessing domestic and angel investors to strengthen the start-up ecosystem.
  • The FM acknowledged the need to create a favourable environment for investors. We look forward to the development of a separate policy for the hybrid instruments for attracting foreign investments. This will have a bearing on the startup ecosystem.

8. Incentives for Job creation
Incentivising employment and job creation – Employment generation was one of the key objectives and suitable measures are announced to meet the same. In line with public pronouncements pertaining to women's empowerment, Budget 2018 made notable announcements for encouraging women employment.


  • To increase in hand salary of women, EPF contribution of women employee’s brought down to 8% for first 3 years.
  • For new jobs - 12% of the wages of the new employees in the EPF for all the sectors for next three years.
  • Facility of fixed term employment will be extended to all sectors - encourages alternate employment models like contracts.

9. Ease of doing business – notable steps in making business process simpler with the use of technology.


  • Amendment in Income tax Act to introduce on assessment to be done in electronic mode to reduce physical interactions.
  • A scheme to assign a Unique ID (AADHAAR) for companies – should to lead single registration across Govt etc.
  • A Central Public Procurement Portal to provide a single point access for all information on procurement. Around 3.5 lakh contractors and vendors are already registered on this platform. In November, 2017 alone, electronic bids for over one lakh tenders valued at around two lakh forty thousand crore were invited through this Portal.
  • Business reforms for ease of doing business deeper and in every State of India, the Government of India has identified 372 specific business reform actions.


10. Make in India


  • Defence Production Policy 2018 to be introduced to promote domestic production by public sector, private sector and MSMEs.
  • Increase in customs duty on Mobile phones from 15% to 20% should support and encourage domestic manufacturing.

11. Other announcements


  • Income Computation and Disclosure Standards - The ICDS, prescribes methods for recognizing revenue, accruing certain expenses, losses, etc. There were deviations in the methodologies prescribed by the ICDS as compared to the accounting standards. The Delhi High Court held that the ICDS is not meant to overrule the provisions of the Act (since they were contradicting the IT Act in many places), the Rules thereunder and the judicial precedents applicable thereto. To give more legal backing to the ICDS and remove the legal handicap, most of the changes suggested by the ICDS have now been incorporated in the IT Act itself in Budget 2018. This in a way removes the legal lacunae that the Delhi High Court had pointed out. The changes will retrospectively apply from FY 2016-17. 


  •  Amendment in section 80JJA - Extending of incentive to the wage bill of new employees who don’t satisfy the threshold is a positive amendment, since it removes the lacunae in the law. 


  • Long-term capital gains tax on gains arising from the transfer of listed equity shares exceeding Rs 1 Lakh will be taxed at 10 %, without allowing any indexation benefit. However, all gains up to 31st January, 2018 will be grandfathered.


  • Rationalisation of provisions relating to filing of Country-by-Country Report by providing the time-limits and the definition of ‘agreement’.

(With inputs from our knowledge partners - Deloitte Touche Tohmatsu India LLP)

Dear All,


Bringing to your notice a recent circular released by CBDT (Circular No. 26/2017) extending the due date for furnishing of the Country-by-Country (“CbC”) report for the reporting accounting year 2016-17, from 30 November 2017 to 31 March 2018.


As per the provisions of section 286(2) of the Act, the CbC report is required to be furnished by on or before the due date of furnishing tax return under section 139 (1) of the Act (i.e. November 30, 2017). The Circular states that FY 2016-17 being the first reporting year and the fact that the rules for furnishing of CbC report are still under consideration, the CbC report for the reporting accounting year 2016-17 has to be furnished by 31 March 2018 in place of the earlier due date of 30 November 2017.


Please note that the due date of furnishing of the CbC report for the subsequent years .i.e. reporting accounting year 2017-18 onwards continues to be the due date of filing the income-tax return i.e. 30 November following the financial year.


A copy of  the rules is attached herewith for your reference.


The Central Board of Direct Taxes has released the awaited draft rules in relation to CBC reporting, Master File and related notifications required to be filed in India. These are draft rules and the CBDT has invited public comments and suggestions. Finance Act, 2016 had introduced the Country by Country (‘CbC’) report and master file reporting requirements effective from 1 April 2017 (i.e., applicable for FY 2016-17).


The rules are attached herewith for your reference and key highlights are provided below. A detailed analysis is provided in the attached document.


I. Master File

  • A constituent entity of an MNE group meeting the following quantitative threshold will be required to file the Master File in Form 3CEBA with the Director General of Income-tax (Risk Assessment):
  1. The consolidated revenue of the MNE Group exceeds INR 5000 million (approximately USD 75 million/ Euro 65 million) in the accounting year preceding the previous year; and
  2. The aggregate value of international transactions exceeds INR 500 million (approximately USD 7.5 million / Euro 6.5 million) or international transactions relating to intangible property exceeds INR 100 million [USD 1.5 million / 1.33 million] in the reporting accounting year
  • The Master File information required to be submitted in India is largely in line with the guidance provided under BEPS Action 13, but includes additional information disclosure, such as list of constituent entities engaged in development and management of intangibles along with their addresses.
  • The Master File has to be furnished by the due date of filing the income-tax return (i.e., 30 November, when Form 3CEB is filed). However, for the Financial Year ended 31 March 2017, the due date is extended to 31 March 2018
  • In case of more than one Indian constituent entity, the Master File may be furnished by a constituent entity designated by the MNE group. A notification to this effect need to be submitted in Form 3CEBE to the Director General of Income Tax (Risk Assessment) at least 30 days before the due date for filing the Master File.
  • The Master File has to be kept and maintained for the period of eight years from the end of the relevant assessment year 

II. CbC report

  • A constituent entity of an MNE group in India, which is neither a parent entity nor an alternate reporting entity in India, need to file the CbC report within the above time limit, if, the parent entity of such constituent entity is resident in a country;
  • The due date for filing the CbC report in India continues to be the due date for filing the income-tax return (i.e. 30 November, when Form 3CEB is filed), unless a specific clarification extending the due date is released for FY 2016-17
  • The CbC report needs to be submitted in Form No 3CEBC with the Director General of Income-tax (Risk Assessment) and the disclosure requirements are in line with the requirements under BEPS Action 13
  • The draft rules provide the consolidated MNE group revenue threshold of INR 55,000 million (approximately USD 825 million/ Euro 715 million) in the accounting year preceding the reporting accounting year, for applicability of the rules
  1. With which India does not have an agreement for exchange of the CbC report; or
  2. There has been a systematic failure and such failure is intimated to the Indian constituent entity
  • In case of more than one Indian constituent entity, the CbC report may be furnished by an entity designated by the MNE group. A notification to this effect need to be submitted in Form 3CEBD to the Director General of Income Tax (Risk Assessment) – It appears that the draft rules do not prescribe any timeline for such notification  


III. CbC notification

  • An Indian constituent entity of a MNE group headquartered overseas is required to file a notification in India with the Director General of Income-tax (Risk Assessment), reporting the details of the parent or alternate reporting entity
  • The notification is required to be submitted in Form No 3CEBB on or before sixty days prior to the due date of the filing the income-tax return of the Indian Constituent Entity. (Interestingly for FY 2016-17, the due date for furnishing the notification is elapsed (being 30 September 2017 for filing in 30 November, 2017). Further clarification in this respect is needed from the CBDT)

NASSCOM organised pre-budget interactive sessions for its member at the following locations and dates.




20 September, 2017, Wednesday


21st September, 2017, Thursday


22nd September, 2017,Friday


The objectives of the session were as follows and a summary of  key issues discussed is provided in the attached presentation.

  • Seeking inputs from participants on the issues to be taken up for this year’s NASSCOM pre-budget consultation.
  • Likely issues for upcoming budget, based on ongoing member interaction / feedback
  • Discussion with participants on priorities and industry positions


Government clarifies that provision to amend, cancel and withdrawal of SOFTEX forms is available to companies under the Export Date processing and monitoring system


In response to concerns raised by NASSCOM, RBI has confirmed that  that SEZ/STPI are permitted to report changes in SOFTEX in the EDPMS of RBI with proper flag indicating amendment /cancellation. These provisions are available under the following heads in the EDPMS system.

  • ‘Record indicator 1’ is for new data;
  • ‘Record indicator 2’ is for amendment;
  • ‘Record indicator 3’ is for cancellation of SOFTEX form.


Further, STPI has issues internal communication informing all the STPI directors about the availability of the facility of modification and cancellation of SOFTEX.  We urge you to contact your regional STPI offices for further clarifications in this regard and keep us posted about hurdles if any.

The Annual Union Budget exercise is round the corner.  This year has been a landmark year with the implementation of the new indirect tax regime GST and we have been in touch with you in understanding the legislative and procedural issues. We will be continuing that exercise and would be having a separate section on GST related issues.  You could continue to share your concerns for their inclusion in the pre-budget memorandum and our discussions with the Government.


On the direct tax front, there were several amendments during the year for eg (revised safe harbour provisions, final POEM rules, secondary adjustment guidelines, indirect transfer rules etc). We intend to capture the impact of these announcements and corresponding issues if any. Apart of from these we also need to understand from you issues apart from the amendments listed above.


The issues maybe presented in the following format with a clear segregation into Direct and Indirect taxes, by September 10, 2017 at

Amended Safe Harbour rules for transfer pricing were announced by the Government today. Please see the details in attachment. 

Dear All,


Glad to share a communication received by NASSCOM from RBI which provides for an extension of the relaxation in the timeline for reconciliation of all export Transactions by all exporters till June 30, 2017.


You would be aware that the New Export Data Processing and Monitoring System (EDPMS) introduced by the Reserve Bank of India mandated for the reconciliation of all export Transactions files after Feb 2014 by 30th April, 2017.  Some of the NASSCOM member companies had highlighted serious capacity and system constraints due to which they were unable to meet the stipulated timelines and hence were facing the risk of being in the caution list.


NASSCOM Policy team in Delhi had raised the issue with RBI requesting for a relaxation in timelines. We are glad that our recommendations are considered. The existing extension / relaxation which is valid till June 30, 2017 is aimed at giving further time to AD banks to clear the entries in the EDPMS. The extension is operationalized as under (quoted from the RBI communication):


For any exporter, if the outstanding export bills’ amount is up to 20 per cent of total export bills or the number of open export bills is up to 10 as indicated in the caution list appearing in EDPMS site then AD should not treat such exporters as caution listed till June 30, 2017 subject to satisfaction of the AD based on following documentary evidence(s):


  1. The exporter has declared that the export proceeds have been realized in full for the export bills lying open in EDPMS and eBRC has been issued by bank/s.
  2. In cases where the bills are not realized / partially realized, then the exporter should have submitted request to AD bank(s) for (a) extension of time for realization of export bills and / or (b) request to AD bank(s) for write off of export bills (fully or partially, as the case may be).
  3. Request for cancellation of shipping bill has been submitted by the exporter.


Exporters not falling within above category  i.e. the outstanding export bills’ amount is more than 20 per cent of total export bills and the number of open export bills is more 10 but, are otherwise fulling the conditions at ( i ) to (iii) above shall have to obtain prior approval from RBI. In such cases, AD banks, after verifying above condition, may forward, the cases to RBI for exemption. AD banks have been advised to inform the exporters that their requests to RBI in this regard has necessarily to be routed through the former.


Concerns on part of the exporters listed by RBI (quoted from the RBI communication)


RBI has also raised with us some of the concerns and lapses on part of the exporters. We would request you to take note of these and ensure no lapses at your end.


  1. Prior to implementation of EDPMS in March 2014, export related data and status of exports were not available at a single platform, making the monitoring process difficult.
  2. EDPMS simplified the procedure for filling various returns related to export. Development of EDPMS facilitated the banks to report various returns to RBI through a single platform. In the system, the primary data on exports transactions including offsite software exports from all the sources viz. Customs/SEZ/STPI flow to RBI secured server and the same is available with the respective banks for follow up with the exporters. In the System, the document submission and realization of export proceeds is reported back by the AD banks to RBI through the same secured RBI server so as to facilitate follow up/ data generation. 
  3. The condition regarding caution listing of exporters, if the export bill is not realized beyond two years, is quite old. EDPMS, with the objective of automated processing and monitoring of export data, has only automated the caution listing process. 
  4. As full export proceeds have to be realized in 9 months (present stipulation), you would appreciate that 2 year is sufficiently long period to complete realization and get the requisite formalities complete post realization.
  5. We observe that exporters have been caution listed as they failed to realize full export proceeds, (ii) failed to approach AD banks for extension, (iii) failed to approach AD banks for invoice reduction / write-off (either partial or full), (iv) declared name of different AD bank at the time of initiation of export. Many did not realize that export proceeds have to be realized in full which was not the case. We understand that invoice reduction and invoice/ softex cancellation were not given due attention (the invoice reductions are on account of a) Volume Discount b) Bank charges c) Withholding tax and Invoice / Softex Cancellation are due to scenarios like a) Buyer accepted efforts and invoiced efforts are not matching b) Milestone value approved buyer and invoiced milestone differed c) Invoice rejected by buyer due to variation/change in PO number d) Change in Budget plan of the buyer e) Initial invoice wrongly raised). While for invoice reduction, the exporters should approach the AD bank, cancellation should come from STPI.
  6. Though, we do not want to save or hide inefficiencies of the AD banks in handling the matter by giving our comments at (e) above and they have to take bigger blame, we observe that for about 25 per cent of the cases, exporters have to complete formalities.
  7. The feature of automated caution listing though announced by the RBI in May 2016 and which was to be made effective from June 15, 2016 was to be deferred time and again by RBI in view of consistent representations from exporters and banks. We observe that no efforts were taken to sanitise the data in EDPMS in the interim, nor exporters thought of appreciating RBI’s Circular dated May 26, 2016 in this regard. The Supreme Court appointed SIT and other Government authorities were writing to RBI continuously to share the data of export unrealized but every time we have to plead before them for forbearance. Finally when the feature of automated caution listing was operationalized in EDPMS with effect from March 01, 2017, after giving sufficient time, all concerned were found unprepared.
  8. You should appreciate that even after 1 year from the date of announcement of automated caution listing, the data stand unreconciled involving around 16 lakh export bills.
  9. On the issue of multiple login-IDs for EDPMS, we inform that the same is not required as all bank branches are not required to work online on EDPMS (nor it is warranted). The application leverages IT systems of the banks. The User ID provided to the banks for EDPMS is required only at the time of down loading export data from EDPMS and, thereafter, the data has to be shared by the banks among their branches using their own networks for updation (at least two user IDs have been provided to most of the banks to download the data). The upload of updated data to EDPMS again requires single user ID of banks. Since, it is a batch process mechanism, once the updated data is uploaded (which is normally done in the evening by the banks).

After months of intellectual meanderings, it is here finally - Brexit. Initially it looked likely that the “remain” campaigners would win, having garnered support from none other than the British Prime Minister, the Labour Party and more than 50 per cent of Tory members. As the referendum date got nearer, a different picture emerged. The voices in support of the “leave” campaign became louder. And now it has happened!


India has reached that stage of economic maturity and integration with the global economy where it can no more remain insulated from major global shifts. This note provides a quick analysis of the facts, possible implications and what could impact our sector – positively or negatively. We will continue to track this and provide regular updates as things become clearer.



  • Shock vote in the UK but again many were reading exit polls that are done in cities where people who participate in exit polls do not actually vote
  • People have voted more emotionally than based on economics. Intra EU migration has been a key factor behind the vote that caused people to ignore the advice of many political leaders, leading economists, intelligentsia and international luminaries. We need to understand the strength and causative factors of these emotions.
  • Brexit vote makes UK first country to leave the EU; EU Emergency meeting likely soon
  • Means deal negotiated by PM Cameron with the EU will not be implemented in the UK.
  • GBP is down 10% and Stock markets including FTSE, DAX & CAC opening 8-10% down today which means that UK recession is likely; even the Sensex is down
  • Euro is down 8% if that lasts can trigger EU recession as well
  • Yen has appreciated almost 5% against dollar at around 100 = $1 which ; more and it can trigger another recession in Japan
  • PM had earlier indicated that if UK voted in favour of Brexit, they would invoke Article 50 which means that UK will have 2 year to negotiate divorce thereafter; but in his statement outside 10, Downing Street after the vote, he announced that he would make way for a new leader by October who would then initiate action to invoke Article 50. Meanwhile assured stability, (though this may not calm nerves)
  • Exit terms of UK will only come through after Article 50 is invoked


What it means for the UK?

  • Mistake of making ‘referendum’ a binding commitment instead of mood-gauging tool
  • Political changes that would ensue in the wake of the vote at leadership and key cabinet positions. PM has already indicated that he would make way for new Prime Minister in next couple of months to let new leader to negotiate severance deal. Leavers like Boris Johnson, Michael Gove, Andrea Leadsom, Chris Grayling, Priti Patel and John Whittingdale are now likely to dominate the Government, lead exit negotiations and Leavers will be in a strong position in any leadership election.
  • The political career of his ally George Osborne is very cloudy. He cannot now be Cameron’s successor. Boris Johnson and Teresa May are most likely contenders, but the state of the party is so fragile and turbulent that predictions are very dangerous.
  • England voted overwhelmingly for exit, Wales voted for exit, though by a small margin, Northern Ireland voted to Remain by a small margin while Scotland voted overwhelmingly to Remain. This wide variation in preferences could open up old fault lines like Scotland revisiting the decision to remain within UK.
  • Downgrade of the UK by rating agencies possible
  • India would likely become a more important partner for UK


What it means for the EU?

  • Disintegration of EU could be triggered by one of the biggest constituents deciding to leave EU
  • Other countries may follow suit or hold similar referendum leading to more uncertainty
  • Biggest takeaway is  - Vote is against EU and its policies from a nation that was never a whole hearted member of the EU ; this vote is also against non-inclusive growth
  • EU without UK looks less attractive to India  so EU – India deal could be a casualty
  • EU will also struggle to sell itself with the deals that it has already negotiated and currently negotiating e.g. with Canada, Korea, TPP, TiSA
  • Another Greece type of crisis could accelerate disintegration of the EU
  • EU reactions to the vote would be important. Initial responses have been sober and mature and could moderate concerns of businesses


Global Issues to Watch out for in the near term

  1. 1.    UK recession
  2. 2.    Protectionism would gain ground as each country thinks about itself
  3. 3.    Trump win in the US
  4. 4.    Euro unravelling
  5. 5.    China crash landing


Likely response from Central Bankers

- US Fed may not hike rates for long – not before Dec’16

- UK could reduce rates and add some form of QE with it

- Japan could bring out QE to pump up liquidity and cash

- India might also join and cut rates


What it means for Indian IT  / India

- Every crisis presents opportunities as well

- Every such monumental move has two sides to it



  • With intra EU migration controlled / addressed there would be lesser pressure on the UK policy makers to curtail non EU migration of skilled workers over a period of time
  • EU Directive on Data Flows and regulations like GDPR recently released by the EU will no longer be binding on the UK which means data flows with the UK will not be an issue for Indian IT
  • UK regaining its sovereignty for fast tracking deals with favoured trading partner such as India; India UK FTA deal could move quickly as India has lesser reservations with aggressive interest of UK companies than from EU companies. 
  • Companies that operate in UK and Europe may need to tweak systems and underlying IT layers, which may open up business opportunity for Indian IT companies. However this will be phased over the exit plan.
  • Indian EU deal negotiation strategy can change as EU without UK is less attractive  – whether for Indian IT or India in general





  • Likely decline in the value of the British Pound, which could render many existing contracts losing proposition unless they are renegotiated.
  • The uncertainty surrounding protracted negotiations on the terms of exit and/or future engagement with EU could impact decision making for large projects
  • Indian IT companies may need to establish separate headquarters/ operations for EU, may lead to some disinvestment from UK.
  • Skilled labour mobility across EU and UK could be impacted in the short term
  • Uncertainty about the relationship UK will have with the EU after the severance, will it be like Switzerland or Norway given that UK has been taking more or less its own decisions even while staying within EU
  • Disintegration of the UK and EU cannot be good for world economy and India


In conclusion


This is technically not a binding decision and will have to be endorsed by Parliament. There remains a slim chance that another renegotiation and second referendum might be on offer (the PM’s recent statement seems to be aimed at creating options), but it is more likely that an orderly departure will be agreed upon


The EU is likely to demand an immediate start of formal withdrawal negotiations under Article 50 of the EU Treaty.


The precise nature of relationships will not become clear for a while, but a trade agreement of some kind is essential for the UK and desirable for the EU.


Eurosceptic voices in the EU are heartened by this and the damage to the EU project more generally is immense and threatening. The likely response is for EU political elites to act together with more urgency to deflect further referendums being triggered.