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Last Updated:May 06, 2025, 22:01 IST
The double contribution convention pact will ensure that professionals in either country are not forced to pay national insurance or social security contributions in both
India and the UK sealed the free trade deal along with a double contribution convention. (Image: Stefan Rousseau/AFP/File)
India and the UK on Tuesday announced the closing of talks for the Double Contribution Convention Agreement, one of the key aspects of the landmark free trade deal between the two countries.
The historic announcement regarding the conclusion of talks on the free trade agreement (FTA) was made by Prime Minister Narendra Modi and his British counterpart Keir Starmer. India and the UK sealed the deal along with a double contribution convention.
Modi said the “historic milestone" will catalyse trade, investment, growth and job creation in both the economies.
“In a historic milestone, India and the UK have successfully concluded an ambitious and mutually beneficial Free Trade Agreement, along with a Double Contribution Convention," he said in a social media post. “These landmark agreements will further deepen our Comprehensive Strategic Partnership, and catalyse trade, investment, growth, job creation, and innovation in both our economies," he said.
In a statement, Starmer said it is the biggest deal the UK has done since leaving the EU (European Union) and the “most" ambitious India has ever done.
The FTA is expected to double bilateral trade by 2030. It is also expected to add GBP 4.8 billion annually to the British economy by 2040, as per official estimates.
SHOT IN THE ARM FOR INDIAN COMPANIES, WORKERS: CENTRE
One of India’s key demands, the double contribution convention pact will ensure that professionals in either country are not forced to pay national insurance or social security contributions in both countries.
According to the Union commerce ministry, it will exempt Indian employees on temporary work visas in the UK from making social security contributions for three years. This will lead to savings of around 20 percent of their salary and is expected to benefit more than 60,000 employees from the IT sector alone, it said.
The ministry said benefits to Indian companies and employees is set to exceed Rs 4,000 crore. With this competitiveness boost through social security exemption, it will be a shot in the arm for them, it added.
The UK, however, stressed that when it comes to professional visas, there will be no change to its immigration policy except to offer a more streamlined process for business mobility. India has also succeeded in adding categories such as chefs, musicians and yogis in the UK’s professional visa routes.
WHAT ARE SOCIAL SECURITY CONTRIBUTIONS?
The Organization of Economic Cooperation and Development (OECD) defines social security contributions as mandatory payments, typically made by both employees and employers, that fund various social insurance programmes like retirement, disability, and survivor benefits. In India, these payments are governed by the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 (PF Act), and the schemes under it.
India has social security agreements (SSA) with Belgium, Germany, Switzerland, France, Denmark, Korea, and the Netherlands. Under these, Indian employers and employees do not have to contribute to social security schemes of these countries and can, instead, continue with schemes run by the Employees’ Provident Fund Organisation (EPFO) in India even while serving abroad.
With this agreement, Indian companies and employees in the UK will be exempt from the country’s social security schemes. Earlier, these businesses were burdened by the extra cost. Data from 2021 shows that the compulsory national insurance (NI) contributions of skilled Indian workers in the UK on temporary visas cost an additional £500 per employee a year, over and above all other taxes and health surcharge paid towards the Health Service (NHS).
(With PTI inputs)
Location : First Published:News india India-UK FTA: What Is The Double Contribution Convention Agreement? Explained
