India-UK Trade Deal and Its Impact

The trade deal between India and the UK is set to provide significant advantages to Indian domestic services companies through mutual agreements on social security contributions.

Key Provisions and Benefits

• Social Security Contributions: Employees working temporarily for up to three years in each other's countries will pay social security only in their home countries, benefiting approximately 75,000 Indian workers.
• Double Contributions Convention (DCC): Ensures employees and their employers pay contributions in only one country at a time, preventing fragmentation of social security records.
• Comprehensive and Economic Trade Agreement (CETA): Covers nearly 100% of trade value between the two nations.
• Economic Benefits:
  • Boosts technology and finance sectors.
  • Enhances ease and reduces the cost of doing business.
  • Potential to generate new employment opportunities.
• Market Access: IT, financial, legal, professional, educational services, and digital trade gain greater access to the UK market.

Indian Workforce Advantages

• Indian professionals across various sectors to benefit from simplified visa procedures.
• Liberalized entry categories for professionals such as architects, engineers, and musicians.

Trade Balance and Historical Context

• India's services trade surplus of $189 billion compared to a merchandise trade deficit of $287 billion in 2024-25.
• 16% rise in India's services exports to the UK in 2024 to £14.7 billion.

Political Reactions and Economic Impact

• Political Concerns:
  • Exemption on insurance payments for Indian workers was a contentious issue in British politics.
  • Concerns over increased immigration and impacts on British workers.
• Economic Outlook: UK government anticipates a significantly positive impact, with the DCC cost being a fraction of the deal's overall benefits.

Conclusion

The trade deal signifies a strong partnership between two democratic economies and is expected to bolster global stability and prosperity, as emphasized by leaders like Prime Minister Narendra Modi.