India-UK FTA: 75,000 Indian workers to gain from Britain’s insurance break

Prime Minister Narendra Modi and UK's Prime Minister Keir Starmer AFP Photo

Around 75,000 Indian workers and more than 900 employers in the United Kingdom are set to gain from a three-year exemption on social-security contributions as agreed in the double contribution convention (DCC) signed along with a free trade agreement (FTA) between the two countries on July 24.

The DCC will exempt qualifying Indian workers who are temporarily in the UK (up to a maximum of 36 months) and their employers from paying social security contributions.

New Delhi has extended the same benefit to British workers in India.

This will ensure that workers when they work temporarily in each other’s territory will not pay double contributions towards their social security.

Though this exemption has sparked controversy in the UK, the British government has defended it by terming it as reciprocal and in line with its understanding with other FTA partners.

This practice will operate on similar principles to the UK’s other social security agreements (SSAs) with the European Union and countries such as Switzerland, Norway, Canada, Japan, Chile and South Korea.

To be sure, the exemption will be applicable for detached employees, which means workers who are temporarily sent by their employer to work in another nation, typically while being employed and paid by the company in their home country.

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Mobility gains

India and the UK have also agreed to not impose any numerical restrictions or Economic Needs Test requirements for temporary entry of natural persons to each other’s territory, which is expected to reduce entry barriers.

This means that both countries will not limit the number of people or impose additional economic checks for temporary workers entering each other’s nations.

New Delhi has also secured a quota of 1,800 per year for qualified, professional Indian traditional chefs, yoga instructors and classical musicians entering as contractual service suppliers.

Under this arrangement, temporary entry and stay is permissible up to 12 months in any 24-month period or for the duration of the contract, whichever is less.

Independent Indian professionals, which include those in computer and related services, research and development services, have also received similar benefits.

There are no limitations placed by the UK in its commitments on computer related services, thereby benefiting Indian IT or ITeS (Information Technology or Information Technology enabled Services) in Britain. This would give certain professionals easier access to the UK.