With the United Kingdom (UK) and European Union (EU) agreeing to a minimalist Brexit treaty, the longest political divorce in recent history is near completion. The treaty still needs acceptance by a slew of governments across Europe. But since the alternative is divorce without mitigation at year-end, green signals are inevitable.

Indian industrial firms will be relieved that the Brexit agreement will allow them to continue to treat the UK as their investment gateway to Europe.

London’s plans for becoming the financial gateway for the large capital flows coming into India are less certain. New Delhi was never enthusiastic about Brexit, seeing it as a weakening of western unity and a geopolitical gain for a rising China. More recently, however, it has seen an opportunity in Britain’s desire to orient itself away from Europe and take a hard stand against China. The real test for India will be whether it can leverage the UK’s desire for some quick trade agreement successes and put together a 21st-century economic partnership deal that stresses services, aligns data standards, and incorporates immigration. Brexit has given India an opportunity to show that it is not protectionist as much as forward-looking when it comes to trade, technology, and investment. The question is whether the current central government has a strategic enough sense of trade policy to grasp this chance.

Ajay Sahai, director-general of Federation of Indian Export Organisations recently said, “So far as goods are concerned, there is no change. It may sound selfish, but had there been a Brexit without a deal, India would have got better market access in some sectors. The current situation is also good because Indian exporters who were catering to the EU and UK markets will not have the challenge of meeting different standards and registrations for the markets.”

The gains for India are more likely in the services sector because bilateral services trade between the UK and EU is substantial.

“In sectors such as IT, R&D, architecture, and financial services, we may gain in both the markets but particularly in the UK. For example, in the IT sector, India’s competitor in the EU, particularly in the lower segment of services, is Poland. Now, because Poland will have restrictions on the free movement of professionals, that may be to the advantage of India,” Sahai said.

Indian companies who have based their headquarters either in the UK or the EU to serve both the markets may face some challenges due to restrictions on the movement of professionals.