Scrambling ministers insist £5billion India trade deal will NOT 'undercut' British workers amid row over 'two-tier' tax exemption

Daily Mail​

07-05-2025

The UK-India trade deal will not undercut British workers, a top minister insisted today amid a row over a tax break for migrant workers.
Business secretary Jonathan Reynolds, the architect of the agreement, came out swinging this morning as Labour faced a major backlash to the £5bn agreement announced yesterday.
Under the agreement, tens of thousands of temporary Indian workers will be exempt from paying National Insurance in Britain, making them cheaper to hire.
New Delhi heralded the deal as an 'unprecedented' win, but the UK Prime Minister was accused of introducing 'two-tier taxes' after National Insurance contributions for British firms were increased in last year's Budget.
Writing for MailOnline, shadow business secretary Andrew Griffith said it could put 'hardworking Brits and British companies ... at a competitive disadvantage against Indian companies bringing in Indian workers'.
But Mr Reynolds this morning said critics of the deal were 'confused' and suggested unhappy Tories were jealous they had not managed to achieve a deal when they were in government.
Speaking to the BBC he said the UK has similar deals with 50 other countries including the US, Japan and Chile, the latter getting a five-year exemption from the Tories a few years ago.
Asked whether the agreement meant Indian workers paying less tax than British counterparts doing the same job, Mr Reynolds told the Today programme: 'No.'
He added: 'There is no situation where I would ever tolerate British workers being undercut through any trade agreement we would sign. That is not part of this deal.
'What the Conservatives are confused about, and Reform as well, is a situation where a business in India seconds someone for a short period of time to the UK, or a UK business seconds a worker to India for a short period of time, where you don't pay in simultaneously now to both social security systems.'
The agreement will see workers who are seconded to the UK offices of Indian-based employers, or a multi-national with offices in the country, exempt from NI for the first three years – allowing them to avoid paying both at home, as per Indian law, and in the UK.
The firm will also not have to pay the contributions. The deal will be reciprocal for British workers transferred to workplaces in India.
Officials have not provided an assessment of the cost or impact on UK businesses.
The change is understood to have been a key demand by New Delhi's negotiators who said the agreement, which has been three years in the making, will result in 'significant financial gains' for Indian companies.
The deal will also see the UK lower tariffs on clothes, shoes and food such as frozen prawns from the subcontinent, in exchange for reciprocal cuts for products including whisky and cars.
The tax break was not mentioned by Downing Street in its announcement.
But a statement by the Indian government said it would '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 large number of Indians working in the UK'.
Grim figures yesterday revealed the UK's services sector had shrunk for the first time in 18 months, blamed on the NI increase – which came into force in April – and Donald Trump's trade war.
Ministers say the long-coveted agreement will add £4.8 billion a year to the economy by 2040, with dramatic reductions to levies on scotch whisky, car and other exports from Britain.
More than a dozen rounds of talks involving successive governments have taken place since 2022.
Mr Reynolds and Indian commerce minister Piyush Goyal held final talks in London last week after relaunching negotiations two months ago.
'Two-tier' Keir has sold British workers down the river, writes Andrew Griffith
Keir Starmer campaigned energetically for a second referendum with free movement of people.
He used every trick in the book to try and prevent the UK leaving the EU.
He blocked our Brexit deal 48 times when he was Jeremy Corbyn's bag carrier.
How ironic then, that he is the biggest beneficiary of a Brexit benefit – the India trade deal.
I am yet to hear Labour Ministers crowing about the India Trade deal thank Brexit through gritted teeth for this free trade arrangement. I won't hold my breath.
Unlike the EU, India is on the up. It has an outstanding entrepreneurial spirit and British businesses do well exporting Scottish Whisky, cars, and high-tech aerospace products there. It's why we spent three long years doing the hard yards negotiating the deal.
It could boost our economy, provide some relief to bosses battered by this Labour government and improve trade with one of the fastest growing economies in the world.
But it seems that, as per usual, when Labour negotiates, Britain loses. And today, it is truer than ever – Two tier Keir has been up to his usual tricks, and sold British workers down the river.
Whilst Labour have hiked the Jobs Tax on British workers, they have given a tax cut to Indian workers.
That means hardworking Brits and British companies could be at a competitive disadvantage against Indian companies bringing in Indian workers.
Unsurprisingly, there was no mention of this own goal in any UK government announcement. But Narendra Modi proudly announced it himself and exposed what Keir Starmer tried to bury from the British public.
Labour tried to cover it up, but it was never going to work when the Indian government was so delighted with its negotiating victory. They've been caught in the act.
It means India's biggest win is flooding the UK market with its people. Bizarrely, under this deal, yoga teachers, buskers and takeaway chefs now qualify as skilled labour – meaning they will also be able to bring their dependents. Keir Starmer seems determined to make us the soft touch immigration capital of the world and never misses an opportunity to surrender.
Already, because of Labour's choices, business confidence is tanking, prices are up and growth is down, all while immigration and taxes are at record highs. In Labour's desperation to try and undo some of the damage they have levelled on British businesses, they risk making everything significantly worse.
As with all of these things, the devil is in the detail. And we will look closely at the details of this deal, but it already seems to be unravelling before our eyes.