In a monumental agreement between two governments, India and the UK have signed a deal to facilitate the temporary movement of skilled workers between the two nations. Indian Prime Minister Narendra Modi, speaking alongside UK Prime Minister Sir Keir Starmer at Chequers, described the arrangement as one that will “inject new energy into the service sectors of both countries,” highlighting technology and finance as key beneficiaries. This deal is part of a broader free trade agreement aimed at strengthening UK-India economic ties.
A Modern Framework for Labour Mobility
At the heart of the agreement lies a provision known as the Double Contributions Convention (DCC). This allows Indian workers temporarily posted to the UK by Indian-based employers to avoid paying National Insurance contributions for up to three years. Instead, they will continue to contribute to the Indian social security system. The same reciprocal arrangement applies to UK workers temporarily working in India.
The DCC is not without precedent. The UK has similar agreements with countries including Japan, South Korea, Chile and Iceland. These arrangements aim to prevent dual social security taxation, making it easier and more cost-effective for companies to move staff across borders.
Supporters of the DCC argue that this not only reduces the cost of running business but also encourages international collaboration, innovation and the exchange of expertise. Mr Modi emphasized that the new agreement would “promote ease of doing business, reduce the cost of doing business and increase the confidence of doing business” between the two countries.
A Boost to the UK Economy?
Prime Minister Modi’s assertion that the UK will benefit from India’s “skilled talent” reflects a wider recognition of India’s strength in producing high-quality professionals in fields such as engineering, IT, data science, and financial services.
India is the world’s largest source of STEM graduates, producing more than 2 million engineers annually. This skilled labour pool aligns with the UK’s growing demand for tech and finance professionals, sectors in which companies have faced persistent shortages. The UK’s technology sector alone is valued at over £1 trillion and is constantly in need of specialist talent.
Jonathan Reynolds, the UK’s Business and Trade Secretary, was quick to reassure critics of the deal. Speaking on BBC Radio 4’s Today programme, Reynolds strongly refuted claims that the arrangement could lead to British workers being undercut. “If you were to hire an Indian worker they would pay exactly the same taxes as a British worker,” he said. “You would have higher costs because of the visa charges, the NHS surcharge. It is completely false to say any British worker is undercut by this deal.”
Political Backlash and Domestic Concerns
Despite these reassurances, the deal has not been universally welcomed in the UK. Critics argue that it creates a two-tier tax system, particularly in light of recent decisions by Chancellor Rachel Reeves to increase National Insurance contributions for British employers. The policy, aimed at raising an additional £25 billion in tax revenue, came into effect in April and has been accused of stifling business growth.
Opposition politicians and union leaders have voiced concerns that the exemption for Indian workers could disadvantage British, especially in a political climate increasingly sensitive to immigration. With the rise of Reform UK and growing public scrutiny of Labour’s immigration policies, some within Labour’s own ranks have urged the party to adopt a tougher stance.
Nevertheless, Reynolds dismissed such fears as “completely wrong” and stressed that the deal does not represent a loophole. “This is about people on temporary secondment. They’re not part of the UK labour market in a permanent way,” he said.
Long-Term Migration Impact?
Another point of debate is whether this new mobility agreement will contribute to higher net migration figures, a politically charged issue in the UK. The government has stated clearly that the arrangement is “not expected to have a long-term impact on net migration,” since the workers involved will be in the UK temporarily.
Experts note that while temporary labour mobility may cause short-term fluctuations, it is unlikely to dramatically alter net migration statistics. Moreover, many view the movement of high-skilled labour as essential to maintaining the UK’s global competitiveness.
Strategic Partnership Beyond Migration
The DCC and the broader UK-India trade deal signal a deepening of economic cooperation between two democracies with longstanding historical ties. As India’s economy continues to rise-now the world’s fifth-largest by GDP-ts role as a strategic partner to Western nations, including the UK, is increasingly important.
The trade agreement is also expected to open up new opportunities for British exporters and investors. From pharmaceuticals to green technology, India represents a burgeoning market for British goods and services. Similarly, Indian investors have long been active in the UK economy, particularly in industries such as steel, telecoms and IT.
Conclusion
The UK-India labour mobility agreement represents a pragmatic and modern attempt to address the needs of a modern, globalised economy. By facilitating the exchange of skilled professionals and eliminating unnecessary bureaucratic barriers, it lays the foundation for deeper economic ties and mutual benefit.
While political controversy is inevitable, it is essential to distinguish between rhetoric and fact. If managed properly, this agreement could serve as a model for other international labour partnerships, offering a model for economic cooperation for other parts of the world.