Wondering what Brexit is all about? Read all about it and how it matters to India

With one day left to the referendum, many world leaders and politicians are worried about Britain's possible exit, dubbed as Brexit, from the European Union (EU) and its reverting into conservative protectionism.

The killing of a labour Party MP, Jo Cox on Thursday may have swayed sentiment toward the "Remain" camp, but the naysayers are still no less. While a Brexit will sure dampen Britain's trade relations with other countries as more than half of Britain's export revenue come from EU states, this will have a mixed impact in India.

What it means for India:

Impact on markets and currency

The Brexit is seen as the next big financial event since 2008 causing jerks in markets around the world including India.

India doesn't have to fear much in an event of Brexit, but stock market and currency may turn volatile in the short run.

"Fundamentally, India has nothing to do with Brexit. Even if the event occurs, India is relatively immune, considering very less dependence on UK as a foreign investor," said brokerage IIFL in a research note.

"If the exit (Brexit) happens, I think at least in the short to medium term, there is going to be lot of liquidation, not only in equity markets globally but also in India. Also, there is going to be a lot of volatility in the currency market," said Gaurang Shah to Reuters.

He said should Britain leave the EU, the Indian auto, IT and pharma sectors will get hit primarily.

Also, the coming of the Brexit could force investors to dump high risk assets such as equities and rush to safer havens such as gold.

Indian-based companies in UK

There are over 800 Indian companies based in Britain who are now coming under the pressure of a Brexit. Setting up a base in the UK allowed these companies easy access into the EU market and gaining numerous clients. In case of a Brexit, tariff walls will be created dampening their growth.

Capital flows

Brokerage IIFL believes despite the outcome, emerging market capital flows are seen to be heading towards India in a medium-long term horizon, considering the improvement of the macroeconomic profile of the country coupled with current account deficit, moderating inflation, lower interest rates and stable economic growth.

A recent report by a think-tank Gatewayhouse also said Britain is still the EU country that receives the largest proportion of FDI from India because of the large number of Indian-owned businesses.

 This investment is consistently increasing with 2014-15 seeing a 65% increase, making India the third largest source of FDI to the UK.

Hence, if Britain chooses to leave the EU, it could open up wider opportunities for India to strike a deal with Britain sans the EU rules.  Britain's expertise in cyber security and military technology, and by looking at the keening in FDI, this can become a point of convergence for the two nations. But companies that once enjoyed capital flow into the EU from Britain may have to find another alternative.

Human resource flow

There is a huge diasporic Indian community in Britain and because of the EU economic laws, Indians have found it difficult to obtain a working visa and get jobs in the UK despite being highly qualified.

According to an Indian research body IDSA, UK's employment minister Priti Patel, who is of Indian origin, says that a vote to leave the EU is a vote to bring back control over immigration policy to the UK. This will also impact Indian students who study in Britain universities to find jobs easily.

Britain and the world:

The question of sustaining economically in the global world and regaining autonomy and border controls is a clashing battle between liberals and fanatic sovereign conservatives in Britain.

More than 3 million jobs are linked with Britain's EU membership facilitating influx of immigrants and labourers which have contributed to more than half of Britain's growth since 2005.

A Brexit could increase the cost of trade and services for the country and result in stricter immigration laws which could deteriorate their GDP.