India-UK FTA: How Indian techies will save on salary for three years

Business Standard

07-05-2025

After nearly three and a half years of negotiations, India and the United Kingdom announced on Tuesday the conclusion of talks for a free trade agreement (FTA) that could reshape the way Indians work and do business in Britain. The deal, which covers strategic and economic ties between the fifth- and sixth-largest economies, includes an agreement on social security contributions that is expected to benefit thousands of Indians working in the UK on a temporary basis.
Kajal Dave, Co-Founder of LaunchEd Global, a study abroad and e-learning platform, said, "Although trading in products and services is the primary objective of the FTA, discussions have also included the ability to move by qualified professionals. The regulations are expected to enable short-term business and professional visas, support mutual recognition of qualifications, and facilitate easier migration pathways in high-demand sectors. Even though they might not immediately change student visa restrictions," Dave told Business Standard.
How Indians could benefit
Under the Double Contribution Convention Agreement (DCCA), Indian workers temporarily in the UK and their employers will be exempt from paying social security contributions for three years.
India's commerce ministry said this would make Indian service providers more competitive. 'In an unprecedented achievement, India has secured an 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 Double Contribution Convention,' it said.
Business Standard reported earlier, citing estimates from the commerce ministry, that the agreement is expected to save around 20 per cent of an employee's salary. More than 60,000 employees, mainly from the IT sector, are expected to benefit. The total financial benefit to Indian companies and employees is estimated to exceed Rs 4,000 crore.
Presently, Indian professionals working temporarily in Britain pay compulsory National Insurance (NI) contributions but cannot claim benefits once they return to India.
Industry experts believe the deal could offer wider advantages beyond immediate cost savings.
"The agreement is anticipated to help Indian professionals. Better post-study career prospects, increased acceptance of Indian degrees, and a more hospitable work environment for long-term employment in industries like technology, finance, and healthcare might all result from this for students and aspiring professionals," said Dave.
"For Indian professionals working in the UK, the FTA has the possibility to greatly reduce tax costs and simplify employment laws. If well executed, it may save up to 20 per cent of salaries, which is a significant advantage that improves financial security and increases the UK's appeal to Indian talent," he added.
Varun Singh, Managing Director of XIPHIAS Immigration, said the FTA represents more than a commercial agreement. "The India-UK FTA is more than just a trade pact — it's a gateway for skilled Indian professionals to dream bigger. While the full text is still under wraps, both sides have signalled a strong intent to include provisions that ease mobility for Indian workers, particularly in sectors like IT, healthcare, and finance," Singh told Business Standard.
He added, "For Indians already in the UK, this could translate to faster pathways to permanent residency and broader career prospects. For those aspiring to move, especially young graduates and tech talent, it opens doors to smoother visa processes, potentially even a dedicated mobility scheme."
India already has similar social security agreements with countries including Belgium, Germany, Switzerland, France, Denmark, South Korea and the Netherlands. Workers posted abroad to these countries continue contributing to India's Employees' Provident Fund Organisation (EPFO) without double deductions.
Prime Minister Narendra Modi said he was pleased with the outcome. 'Delighted to speak with my friend PM Keir Starmer. In a historic milestone, India and the UK have successfully concluded an ambitious and mutually beneficial free trade agreement, along with a double contribution convention. These landmark agreements will further deepen our comprehensive strategic partnership and catalyse trade, investment, growth, job creation, and innovation in both our economies. I look forward to welcoming PM Starmer to India soon,' Modi wrote on X.
In the UK Parliament, Douglas Alexander, Minister of State at the Department for Business and Trade, said the agreement preserves Britain's existing rules on immigration. 'The deal does not affect the points-based system. It only covers business mobility, which is different from immigration, as it is about travel for specific and temporary business purposes," he said.
Alexander further said that UK businesses would also benefit from increased mobility routes as they expand into India.
UK Opposition slams govt
The announcement drew criticism from opposition parties in Britain, particularly concerning the treatment of British and Indian workers under the new arrangement.
Liberal Democrat deputy leader Daisy Cooper tweeted, 'It is very worrying to hear concerns that Indian workers coming over here, companies may not have to pay taxes on those workers,' calling for MPs to be given a vote on the deal.
Conservative MP Harriett Baldwin raised concerns in the House of Commons about the potential cost to the British taxpayer. She said, 'Will the convention really mean that, for example, an Indian-owned restaurant chain in the UK could pay no national insurance here for its chef, while the British pub next door pays full national insurance for its curry chef? This government is literally putting up taxes for British workers but cutting them for Indian workers.'
Baldwin questioned whether it would be 20 per cent cheaper for companies to hire Indian workers instead of British ones.
Alexander responded that the arrangement is reciprocal and will benefit British workers posted in India. He said the exemption covers only a specific and limited group of Indian businesspeople, for three years, and pointed out that the UK already has similar agreements with the EU, the US and South Korea.
What about student visas and immigration rules?
The government clarified that student visas were not part of the negotiations.
Alexander said: 'Student visas remained off the table.' He also confirmed that the UK has not created new visa routes under the FTA.
While some business mobility routes have been expanded to cover additional sectors, they will only be available to highly skilled and experienced professionals. Applicants must still meet strict criteria on qualifications and experience.
— No changes have been made to the UK's points-based immigration system
— No new general visa categories have been introduced for Indian citizens
— Business mobility provisions are strictly temporary and sector-specific
The government reiterated that Indian workers benefiting from the agreement will still have to pay the immigration health surcharge, which funds the NHS.
The United Kingdom's points-based immigration system is the framework used to decide who can work, study, or settle in the UK. In this, applicants must earn at least 70 points to qualify for most work visas.
Points are awarded based on specific criteria such as:
Having a job offer from an approved UK employer (20 points)
Speaking English at a required level (10 points)
Job being at an appropriate skill level (20 points)
Salary level (0–20 points depending on the salary band)
Occupation being in a shortage field (extra points)
Having a relevant PhD (extra points if related to the job, especially in STEM fields)
Types of visas under the system include:
Skilled Worker visa: For people with an eligible job offer.
Health and Care Worker visa: For doctors, nurses, carers, etc.
Global Talent visa: For leaders or potential leaders in fields like science, engineering, the arts.