India and the United Kingdom successfully concluded negotiations for a landmark India-UK FTA. This agreement marks a significant milestone in the expanding economic partnership between the two nations. Furthermore, the deal serves as the first major trade pact between the countries. Leaders expect the agreement to boost bilateral trade and deepen economic collaboration. Specifically, the nations target a doubling of bilateral trade to $120 billion by 2030. Trade between the two countries already increased to $21.34 billion in 2023-24 from $20.36 billion in 2022–23. Additionally, the average duty on goods imported from India into the UK currently stands at 4.2%.
Major Goals for the India-UK FTA
The India-UK FTA builds on discussions held between Prime Ministers Narendra Modi and Keir Starmer at the G-20 summit in Rio de Janeiro in November 2024. Following this meeting, intense negotiations resumed in February 2025. India’s Commerce and Industry Minister Piyush Goyal and UK Secretary of State Jonathan Reynolds led these efforts along with their respective teams. Consequently, the teams finalised the framework to enhance market access and economic ties.
Strategic Roles of the India-UK FTA
One of the standout features of the agreement includes the Double Contribution Convention. Experts hail this component as a game changer for Indian workers in the UK. According to Atul Pandey, Partner at Khaitan & Co, the signing of this convention alongside the India-UK FTA represents a landmark step. This measure eases the cost burden for Indian companies sending talent abroad, especially in the IT and consulting sectors. By eliminating dual social security contributions, India enhances its global competitiveness while ensuring greater mobility for professionals. Furthermore, reduced tariffs and wider market access under the deal catalyse export-led growth in sectors like auto components and IT.
Understanding the Double Contribution Convention
The Double Contribution Convention acts as a key component of the India-UK FTA. This convention aims to prevent individuals from paying double social security contributions when they work or live in both countries. Workers and employers make these payments to fund pensions, healthcare, and other welfare programmes. India already maintains social security agreements with countries like Belgium, Germany, and Switzerland. Under these agreements, Indian employees do not contribute to local social security schemes abroad. Instead, they continue contributing to the Employees’ Provident Fund Organisation in India.
Previously, this did not apply to the UK, where Indian businesses faced a heavy cost burden. Data from 2021 shows that skilled Indian workers on temporary visas paid an additional £500 annually in National Insurance contributions. This cost came on top of other taxes and the health surcharge for the National Health Service. The new convention resolves this issue by allowing contributions solely in the home country. Consequently, the measure simplifies administrative processes and reduces the financial burden on Indian workers and their employers.
Source: cnbctv18.com
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