India, on Friday, signed its first bilateral agreement on social security with Belgium, which would exempt Indian companies from social security contribution in respect of their employees. The agreement was signed with Belgium as part of the efforts to strengthen the economic relations between the two countries.

The agreement will serve as a model for similar agreements with other countries in the European Union, according to an official communiqué.

The Ministry of Overseas Indian Affairs is already negotiating similar agreements with countries such as the Netherlands and France. "Such agreements would also make Indian companies more competitive since exemption from social security contribution in respect of their employees substantially reduces costs," the statement said.

The agreement was signed by Mr Vayalar Ravi, Minister of Overseas Indian Affairs on behalf of the Government of India, and by Mr Karel De Gucht, the Foreign Minister of Belgium, in the presence of Prime Minister, Dr Manmohan Singh, and the Prime Minister of Belgium, Mr Guy Verhofstadt, in New Delhi.

The bilateral social security agreements become an important instrument to protect the interests of Indian professionals by securing exemption from social security contribution in case of short-term contracts and exportability of benefits in case of relocation, given the social security system extant in most countries.

The agreement negotiated by the Ministry of Overseas Indian Affairs with Belgium provides for benefits to Indians and Belgians working in each other's countries. As per the agreement, those working on a short-term contract of up to 60 months are exempted from social security contributions in the host country provided they continue to make social security payments in their home countries.

It also envisages that those who live and work for periods longer than 60 months and make social security contributions under the host country laws will be entitled to the export of the social security benefits should they relocate to the home country on completion of their contract or on retirement. These benefits will also be available to employees sent by a company to the host country from a third country.

As regards the self-employed Indians in Belgium contributing to the Belgian social security system, the agreement provides that they will be entitled to the export of social security benefits should they choose to relocate to India.

There are about 7,000 Indians working in Belgium in different sectors, some are self-employed. The significance of the agreement arises from the fact that the investment by Indian companies in Belgium and the investment by Belgium companies in India have been growing rapidly in recent years.

Taken from Business Line

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