Social security agreement is a non-negotiable part of India’s free trade agreement (FTA) discussions, commerce and industry minister Piyush Goyal said.
A Double Contribution Convention Agreement (DCCA was agreed to, along with the FTA between the UK and India in May.
“It (DCCA) was on the table for the last three years to bring balance and equity to the trade deal between the two economies,” the minister said at an event in London.
The agreement exempts Indian professionals and their employers from paying social security contributions in the UK for short-term assignments of up to three years. After the agreement is operationalised the temporary Indian workers in UK will pay their social security contributions in India for the first year and for two years nothing will be collected from the,
There has been some criticism in the UK regarding the agreement with some saying that it will mean less tax on foreign workers vis-a-vis locals.
UK secretary of state for business and trade Jonathan Reynolds, who also participated in the event, said, “It is a business mobility provision which the UK has with every country in the world for persons coming temporarily for business or multinationals posting staff in the UK.”
“With 50 other countries we have extended provision. It is reciprocal so UK nationals employed by those companies in India pay into our system (for one year),” he said.
“Since they (temporary professionals) stay less than the 10 year threshold (to qualify for receiving benefits against their social security contributions in the UK) this money otherwise won’t be paid back to them. Therefore it was discussed three years ago that in all fairness such temporary people who come to add value to the UK economy should not be in a way double taxed partying social security costs in India and UK,” Goyal added.
The DCCA would help employers in sectors such as IT, finance, education, and healthcare, and promote talent mobility to the UK. Once the DCC is in place, Indian companies could deploy talent to the UK without incurring additional social security costs, making them more cost-effective in global operations, according to BDO Global.
Goyal is on an official visit to the UK from June 18 to 19. He will hold a bilateral meeting with Reynolds to review the progress made in the ongoing FTA negotiations and chart out a clear, time-bound roadmap for its finalisation and implementation.
He will also meet the UK Chancellor of the Exchequer Rachel Reeves to discuss macroeconomic priorities, financial cooperation, and investment facilitation between the two countries.
In addition, the minister is scheduled to engage with Secretary of State for Culture, Media and Sport Lisa Nandy to explore avenues of collaboration in creative industries and innovation-driven sectors.