The UK’s business and trade secretary defended the UK and India free trade agreement, saying that critics were “confused” if they thought the deal “undercut” British workers and businesses because Indian companies and individuals will not be required to pay National Insurance Contributions (NICs) to the UK.
Jonathan Reynolds claimed that Conservatives and Reform UK “could not accept” the fact that Labour was able to get the deal through when the previous government couldn’t. He told BBC that he would not tolerate British workers getting undercut by a trade deal.
This free trade agreement is the largest since Brexit and will see Indian taxes on British products such as whisky, cars, and cars, fall by up to 90 percent. The agreement is expected to increase trade between India and the UK by 40%, and boost GDP by PS5bn in 2040.
In addition to the agreement, India and the UK have entered into a “double contribution convention” (DCC), that will work in a similar manner as agreements with the EU and Canada.
DCC is a system that allows employees and employers to only pay social security contributions once in a country.
The Department for Business and Trade says that it will also prevent the fragmentation in social security records of employees who temporarily work in another country for up three years.
The UK Immigration Health Surcharge or employees’ right to receive benefits in the country where they pay their social security contributions will remain unchanged.
Kemi Badenoch, Conservative leader and former Business Secretary, said that she refused to accept a similar trade-off when she was in the position of Business Secretary because it contained “two-tier taxation” which would have cost the UK hundreds of millions.
Nigel Farage of Reform UK called it “appalling”, and said the government made it cheaper to hire an Indian worker than British workers by 20%.
Reynolds said to Times Radio, “We have similar agreements with 50 other countries.” This is nothing new… Our people pay into our systems. India’s citizens pay into their system. The overall impact of this agreement is hundreds of millions more pounds in additional revenue for the exchequer due to the increased economic growth.”
Brendan Chilton is the CEO of Independent Business Network. Tweeted “Extraordinary that so-called Brexiteers are attacking a free trading agreement between the UK with the largest economy in Commonwealth. The NIC is reciprocal. “What we see is Reform inciting racism against Indian workers in the UK, and that is disgusting.”
In 2012, the Conservative-Liberal-Democrat coalition signed a DCC agreement with Chile lasting five years. However, critics of Labour’s deal claim that India’s economy is not comparable to Chile’s.
Allie Renison , a former adviser on trade policy to the government, , tweeted , “People can’t come unless they are sent by their company to do specific overseas work for a limited time period. It’s not like they were looking for a job to begin with. If only people read instead of thinking that everything is a conspiracy.
“Grown-ups are in the Room”
Marley Morris, Associate Director for Trade at the Institute for Public Policy Research said: “After 3 prime ministers failed in getting a deal with India through, this is a big win for Starmer, especially at a moment when Trump’s Tariffs are making the international trade more fraught.
This deal will reduce tariffs, increase growth and create new jobs. This deal shows that the UK, in contrast to Trump, can still be mature in an uncertain global economy and turn uncertainty into opportunities.
The deal was made possible, in part, by negotiating an agreement on social security for Indian workers along with the free-trade agreement. This shows the importance of international diplomacy, compromise and economic growth.
Rain Newton-Smith said, “The UK Government’s commitment to delivering an agreement that safeguards national interests, protects standards and provides market access for UK companies should be commended.” The CBI is looking forward to working with government to ensure that firms can make the most out of this deal in the future.
Rohan Malik is the managing partner for government and public sectors at EY. He said that the agreement will accelerate an already flourishing economic partnership. The value of trade between India and the UK has more than doubled in the past decade, from PS16.6bn up to PS40bn.
British businesses will benefit from enhanced access to the largest export market in the world and a pool of skills that can fuel strategic UK sectors such as professional services, emerging industries and data-driven AI.
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