 "India UK, FTA")
India and the UK’s decision to avoid double contribution to social security funds by Indian professionals working temporarily in the UK is expected to have a positive impact on Indian companies operating there, especially IT service providers.
Announcement of the Double Contribution Convention Agreement was made along with the free trade agreement (FTA) between the two countries.
IT industry body Nasscom said securing the DCC within the India-UK FTA is a crucial step and a big win for the Indian IT industry.
“It will significantly boost opportunities, making the UK a more competitive and attractive destination for investments. This has been a long-standing demand of the Indian technology and services industry, and Nasscom has consistently advocated for its inclusion in bilateral negotiations,” it said in a statement.
Indian professionals working in Britain contribute to social security funds but are not able to get the benefits as they return once a project is complete. However, companies have long been pressing to do away with this regulation as it involved higher costs. Under the current circumstances, that would mean less cost, which is likely to increase competitiveness.
“The exemption for Indian workers who are temporarily in the UK and their employers from paying social security contributions in the UK for a period of three years under the DCC will lead to significant financial gains for the Indian service providers and enhance their competitiveness in the UK market that would create new job opportunities as well as benefit a large number of Indians working in the UK,” read the agreement.
Peter Bendor-Samuel, founder and executive chairman, Everest Group, said this agreement would “modestly reduce friction” in the services trade.
“The benefits will largely accrue to individuals working in the tech services firms. It would not meaningfully increase demand for tech services or materially reduce the cost of doing business. Hence, we do not anticipate that it will accelerate growth or increase margins. However, it will make life a little easier for executives and tech teams which move back and forth across these countries,” he added.
The FTA also eases mobility for professionals including contractual service suppliers, business visitors, investors, intra-corporate transferees, partners, and dependent children of intra-corporate transferees with right to work.
Immense opportunities for talented and skilled Indian youth will open up in the UK which is a major global centre for digitally-delivered services due to its strong financial and professional services sectors and advanced digital infrastructure.
India has secured significant commitments on digitally-delivered services for Indian service suppliers. This is especially in professional services such as architecture and engineering, computer-related services and telecommunication services.
