The industry has welcomed a positive step towards a possible India-UK Social Security Agreement, a long-standing demand of Indian businesses operating in Britain to cut down on the additional cost burden associated with bringing in skilled Indian professionals on a short-term basis.
The 11th India-UK Economic and Financial Dialogue (EFD) between Finance Minister Nirmala Sitharaman and UK Chancellor Rishi Sunak, which took place via videoconference on Thursday, ended in a joint statement that covered a wide range of areas from climate change cooperation to financial services investment boost.
Also covered in the statement was a commitment to hold talks that would look to address the social security or pension contribution payments for Indian professionals only in the UK temporarily.
"The UK and India committed to a joint dialogue, including relevant stakeholder participation, for mutual exchanges and sharing of information concerning the possibility of signing a Social Security Agreement. The first meeting took place on 26th August 2021," notes the joint statement.
The Federation of Indian Chambers of Commerce and Industry (FICCI), which has been campaigning on the issue over the years, said its long-standing concern is finally being addressed.
The compulsory National Insurance (NI) contributions of skilled Indian professionals in the UK on temporary visas remains an additional cost burden of around GBP 500 per employee a year, over and above all other taxes and health surcharge paid towards the National Health Service (NHS).
"We are pleased that the two countries are now firmly committed to working towards a possibility of signing a Social Security Agreement. This has been a long-standing concern of FICCI members, as contributions by Indian professionals and companies cost between GBP 413 and GBP 522 per year," said Baroness Usha Prashar, Chairperson of the FICCI UK Council.
The history of this issue goes as far back as 2007, resulting in a formal letter to the Indian High Commission in London in December 2010 which seemed to have closed the door on the matter from the UK side.
However, with estimated Indian employee contributions of between GBP 400 and 600 million being at stake annually, the lobbying on the issue continued and the UK's social security agreement in place with the US was pointed out as a good model to pursue.
It would now seem that there is some movement towards finding a long-term resolution. The India-UK EFD marked the signing off of a $1.2-billion package of public and private investment in green projects and renewable energy to boost India's green growth ambitions.
It also saw the launch of a new Climate Finance Leadership Initiative (CFLI) India partnership, aimed at mobilising private capital into sustainable infrastructure in India, including clean energy like wind and solar power and other green technologies.
"The announcements in the joint statement are encouraging and FICCI welcomes the ambitious cooperation based on our shared vision for economic growth, sustainability and investment," said Prashar.
"We are encouraged that the two ministers welcomed the work of the UK-India Sustainable Finance Working Group which is led by FICCI and the City of London Corporation. The group aims to scale flows of finance to support India's sustainable development goals. The group also provides advice and recommendations to green the financial system, including appropriate disclosures and taxonomy," she added.
The EFD is held annually between India and the UK and the next one is scheduled in London in 2022. This week's interaction between the senior Cabinet ministers was targeted at driving forward the bilateral agenda of an Enhanced Trade Partnership (ETP), just as the UK's public consultation process for the scope of trade negotiations with India closed on August 31.
Both sides have agreed to work towards a free trade agreement (FTA) in future with a man initial goal of doubling India-UK bilateral trade by 2030.