India, US start talks on totalisation pact

By: | Published: August 5, 2015 7:49 AM

India at present has 14 totalisation pacts with countries including Belgium, Germany and France and has recently also signed a social security agreement with Canada.

india us totalisation agreementThe absence of a totalisation pact means that United States workers working in India too are not permitted to repatriate their social security contributions when they leave. (Reuters)

In a move that could benefit over five lakh Indians working in the United States on non-immigration visas, the two countries have initiated talks on a totalisation pact.

Sources said official delegations from the two countries have met recently to discuss the totalisation pact that would allow citizens from the two countries to repatriate their social security savings when they return to their home country.

“Talks have just started and the US has sought details of India’s social security cover and its similar agreements with other countries. However, finalisation of the agreement could take some time,” said a person familiar with the development. The development comes after Prime Minister Narendra Modi’s visit to the US last year, which was followed by a visit by US President Barack Obama to India as the chief guest for this year’s Republic Day celebrations.

India US totalisation pact

The absence of a totalisation pact means that United States workers working in India too are not permitted to repatriate their social security contributions when they leave, but officials point out that the problem is much bigger for India given the huge number of Indian working in the United States.

With an annual $1 billion deposited by Indian workers to the US social security system, India had pitched for a totalisation agreement at meetings during both the visits. Typically, such workers stay in the US for a period of three to seven years and contribute about 15 per cent of their salary to the US social security system. With no totalisation pact in place, these workers lose the entire social security contributions unless they complete 10 years of mandatory contributions. India at present has 14 totalisation pacts with countries including Belgium, Germany and France and has recently also signed a social security agreement with Canada. India has been trying since 2007 to address this anomaly and had initiated discussions with the US Social Security Administration in December 2007.

However, the US had argued that their social security system was not compatible with that of Indian, which is social security system, administered by the Employees’ Provident Fund Organisation.

India has also started umbrella social security schemes this year including the Atal Pension Yojana, the Pradhan Mantri Jeevan Jyoti Bima Yojana and the Pradhan Mantri Suraksha Bima Yojana, apart from the Employees’ Provident Fund to cover informal sector workers.

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