India-UK FTA will help thousands of Indian workers save big in Britain

Thousands of professionals from India, including those in the tech industry, are set to reap significant benefits from the Free Trade Agreement (FTA) between India and the United Kingdom. India and the UK announced on Tuesday that they had concluded negotiations on a social security agreement, which would exempt Indian professionals working temporarily in Britain from making dual contributions to social security systems.

It was argued that Indian professionals working on temporary assignments in the UK were required to contribute to British social security funds but were unable to claim any benefits as they returned to India upon completing their projects.

Social security contributions are meant for essential benefits, including pensions, healthcare, and unemployment support, through payments made by workers and employers.

The agreement will help Indians save around 20 per cent of their salary, an official said, adding it is expected to benefit more than 60,000 employees from the IT sector alone, news agency PTI reported.

The benefits to Indian companies and employees would exceed Rs 4,000 crore, according to the report.

“In an unprecedented achievement, India has secured an exemption for Indian workers who are temporarily in the UK and their employers from paying social security contributions in the UK for a period of three years under the Double Contribution Convention,” India’s Commerce Ministry said.

The announcement of the Double Contribution Convention agreement was made along with the Free Trade Agreement (FTA) between the two countries.

Indian businesses operating in the UK have long called for measures to reduce the additional cost burden of bringing skilled Indian professionals on short-term assignments.

Notably, India has signed social security pacts with many countries, like Belgium, Germany, Switzerland, France, Denmark, South Korea, and the Netherlands. Hence, Indians working abroad are exempt from contributing to social security schemes in these countries.

OPPOSITION PARTIES IN UK SLAM PACT

Opposition parties have criticised the newly-signed trade deal, arguing it could undercut British workers. They said three-year exemptions from social security contributions would harm UK workers.

Conservatives, Liberal Democrats, and Reform have claimed this could mean Indian workers become cheaper to hire than British workers—particularly when UK employers’ National Insurance Contributions (NICs) have just been increased, BBC reported.

The Indian government hailed the exemption as a “huge win” and an “unprecedented achievement,” stating it will significantly boost Indian service providers’ competitiveness in the UK.

Conservative leader Kemi Badenoch claimed she had refused a similar trade-off when she was Business Secretary because the deal contains “two-tier taxes” which will cost the UK “hundreds of millions,” according to the BBC report.

“I had this deal on the table as Trade Secretary and I refused to sign it because that double taxation agreement was unfair,” BBC quoted her as saying.

“It basically encourages workers from India but does not provide the same benefit to UK citizens,” she added.