India-UK social security pact to slash costs for firms; up to 95% of Indian professionals to gain
Thousands of Indian professionals working in Britain through Indian employers will stop paying dual social security contributions from July 15, with officials estimating that 90-95% of such workers will benefit from the India-UK social security pact coming into force alongside the free trade agreement.The Agreement on Social Security, or Double Contribution Convention (DCC), is expected to lower employment costs for Indian companies operating in Britain and strengthen the competitiveness of sectors such as information technology and professional services.Under the arrangement, employees temporarily deputed from India to the UK, or vice versa, will be exempt from contributing to the host country’s social security system for up to five years, provided they continue contributing in their home country.“If an employer is contributing in India for the social security of the employee, they do not have to pay in the UK. For that, they have to share a certificate of coverage. From July 15, Indian employers can start enjoying this exemption,” an official said, as quoted PTI.The benefit was a key demand from India during negotiations and is expected to particularly help major IT companies such as Tata Consultancy Services (TCS) and Infosys, which deploy a large number of professionals to the UK.Around 75,000 Indian professionals currently work in Britain, while more than 900 Indian companies have operations there. The average annual salary of a professional in the UK is estimated at GBP 40,000-50,000, with about 15% of earnings typically going towards social security contributions.The exemption is available only to employees of Indian companies on temporary assignments and will not apply to Indians employed directly by foreign companies in the UK.Officials said the pact would support cross-border mobility and ensure continuity of social security coverage for employees working overseas for limited periods.The development assumes significance as the UK remains the second-largest market for India’s $283-billion IT industry and contributes about 17% of the sector’s export revenues.India’s services exports to the UK stood at $21.6 billion in 2024, while imports were $13.7 billion.The social security pact will take effect alongside the India-UK Comprehensive Economic and Trade Agreement (CETA), which both countries announced will be operational from July 15.UK Business and Trade Secretary Peter Kyle said the arrangement would benefit professionals from both countries.“We have extended the benefit for UK nationals moving to India to work and continue to build entitlement to a UK State Pension from 36 months to 60 months. They will continue to pay National Insurance Contributions during that period, without also having to pay social security contributions in India,” he said.The provision is reciprocal and applies to highly skilled professionals moving under existing visa routes. The UK already has similar arrangements with countries including Korea, Japan and Canada.Kyle said the social security agreement and the FTA would make trade “cheaper, quicker, and easier” for businesses in both countries.Officials also expect the wider trade deal to boost labour-intensive sectors such as textiles and footwear by granting duty-free access to the British market. These sectors currently face import duties of around 8-10% in the UK.The agreement is projected to increase bilateral trade by GBP 25.5 billion annually in the long run, while boosting UK GDP by GBP 4.8 billion and Indian GDP by GBP 5.1 billion.“This is the most expansive agreement. It is a most aspirational agreement,” the official said.
