NEW DELHI, June 18: About 90-95 per cent of Indian professionals employed by Indian companies operating in the UK would benefit from the social security agreement between the two countries, a move that will reduce costs for firms and enhance the competitiveness of Indian service providers in the British market, an official said.
The two countries, on June 17, announced that the Agreement on Social Security or the Double Contribution Convention (DCC) and the Comprehensive Economic and Trade Agreement (CETA) will come into effect on July 15.
The DCC will give a major boost to IT majors like Tata Consultancy Services (TCS) and Infosys.
Professionals of Indian-origin contribute about USD 0.5 billion each year to the UK social security.
Under the DCC, employees temporarily transferred by companies from India to the UK, or vice versa, will be exempt from making social security contributions in the host country for up to five years.
It was a key demand of India.
Around 75,000 Indian professionals are working in Britain, while over 900 Indian firms have operations there. The average annual salary of a professional in the UK is estimated at GBP 40,000-50,000.
According to estimates, about 15 per cent of the salary is paid towards social security contributions.
Normally, a professional becomes eligible for social security benefits in the UK after around 10 years of service.
“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,” the official said.
However, the exemption is not available for Indians working for other foreign companies in Britain.
The agreement will support mobility and continued social security coverage of the employees on temporary overseas assignments. This will enhance India-UK partnerships in the service sector, leveraging the high skills and innovative service sectors of both countries.
The announcement is important as the UK is the second-largest export market for the USD 283-billion Indian IT industry, and contributes 17 per cent to its export basket.
India’s services exports to the UK stood at USD 21.6 billion in 2024, while imports were USD 13.7 billion.
Meanwhile, UK Business and Trade Secretary Peter Kyle, in a statement, said trade is going to be cheaper, quicker, and easier for businesses on both sides.
“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.
This is reciprocal for both British and Indian professionals and will be applicable to highly skilled professionals on pre-existing visa routes.
This is in line with the UK’s arrangements with other countries such as Korea, Japan, and Canada.
Kyle said that this will be achieved through the UK-India Double Contributions Convention Agreement, which will enter into force at the same time as the UK-India FTA.
To benefit from the tariff reductions, UK businesses must register with HMRC and Indian businesses must refer to the Government of India guidelines, he said, adding, “we would now encourage businesses to use the next few days to register and ensure they are fully prepared to reap the benefits of this deal.”
The deal boosts UK GDP by 4.8 billion pounds and Indian GDP by 5.1 billion pounds, and bilateral trade by 25.5 billion pounds every year in the long run.
 It will bring a range of benefits to industries across the UK and India, with whisky tariffs dropping from 150 per cent to 40 per cent, automotives from 100 per cent to 10 per cent under a quota and cosmetics will see tariffs of up to 22 per cent eliminated either from day one or after staging.
The UK will cut tariffs on Indian goods coming into the country, such as clothes, footwear, and some food products.
Less cost for British businesses importing Indian products could mean lower prices and more choice for consumers across the country.  
Further, the official said the agreement is expected to provide a significant boost to India’s labour-intensive sectors such as textiles and footwear by granting them duty-free access to the British market.
These sectors currently face import duties of around 8-10 per cent in the UK, and the tariff elimination will give Indian exporters a competitive edge over rival supplying nations, the official said.
“This is the most expansive agreement. It is a most aspirational agreement,” the official added. (PTI)
