India-UK Social Security Pact to Save Costs for Indian Professionals

India-UK Social Security Pact to Benefit Indian Professionals, Reduce Costs for Employers

Starting July 15, thousands of Indian professionals working in the UK through Indian employers will no longer have to pay dual social security contributions, thanks to the India-UK social security agreement. Officials estimate that 90-95% of such workers will benefit from the pact, which will come into effect alongside the India-UK Comprehensive Economic and Trade Agreement (CETA).

The Agreement on Social Security, also known as the Double Contribution Convention (DCC), is designed to lower employment costs for Indian companies operating in Britain. It is expected to enhance the competitiveness of key sectors such as information technology and professional services.

Under the pact, employees temporarily deputed from India to the UK—or vice versa—will be exempt from contributing to the host country’s social security system for up to five years, provided they continue contributing in their home country. Employers will need to provide a certificate of coverage to avail of this benefit. The exemption will be available only to employees of Indian companies on temporary assignments and will not apply to Indians directly employed by foreign companies in the UK.

Indian employers can begin taking advantage of this exemption from July 15. This development is particularly significant for major IT companies such as Tata Consultancy Services (TCS) and Infosys, which deploy a large number of professionals to the UK. Currently, around 75,000 Indian professionals work in Britain, and over 900 Indian companies have operations there.

The average annual salary of a professional in the UK is estimated at GBP 40,000-50,000, with approximately 15% of earnings typically allocated to social security contributions. By avoiding dual payments, Indian professionals and their employers are expected to save significantly.

The agreement also facilitates cross-border mobility and ensures continuity of social security coverage for employees working overseas for limited periods. This is particularly relevant as the UK is the second-largest market for India’s $283-billion IT industry, contributing about 17% of the sector’s export revenues. In 2024, India’s services exports to the UK stood at $21.6 billion, while imports were $13.7 billion.

UK Business and Trade Secretary Peter Kyle highlighted the reciprocal nature of the arrangement, which also benefits UK nationals moving to India. UK professionals will now be able to extend their entitlement to a UK State Pension from 36 months to 60 months while continuing to pay National Insurance Contributions without additional social security payments in India. Similar agreements are already in place between the UK and countries like Korea, Japan, and Canada.

The social security pact is part of the broader CETA, which aims to make trade between the two nations "cheaper, quicker, and easier." The wider trade deal is expected to boost labour-intensive sectors such as textiles and footwear by granting duty-free access to the British market, where these products currently face import duties of 8-10%. Officials project that the agreement will increase bilateral trade by GBP 25.5 billion annually in the long term, while boosting UK GDP by GBP 4.8 billion and Indian GDP by GBP 5.1 billion.

"This is the most expansive and aspirational agreement," an Indian official remarked, underscoring the significance of the pact for both nations.