“Two-Tier Taxes” or Political Spin? The Real Story Behind the India Trade Pact

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The new UK-India trade agreement has been criticised by Kemi Badenoch and Nigel Farage, who allege its tax clauses introduce "two-tier taxes" benefiting Indian workers. However, a more careful examination of facts shows that such criticisms are unfair and overlook the common global practice underlying the deal.

Key Highlights:

Not a Favour, But Normal Procedure: The agreement continues a "double contributions convention" (DCC), excluding Indian workers temporarily deployed to the UK (and the other way around) from contributing to social security contributions (National Insurance) in either nation for three years. It avoids dual taxation for workers who do not enjoy both systems-a principle that is already between the UK and more than 50 nations, including the US, EU, Canada, and Japan.
No Additional Visas, No Large Scale Immigration: It doesn't reduce or increase the amount of visas and it won't make entry for Indian labour into the UK simpler. It covers only one restricted group: staff on brief corporate transfers, not the rest of the migrant population.
No Cost Advantage for Indian Workers: Indian secondees will continue to pay the equivalent of National Insurance in India, as well as UK income tax and the NHS surcharge. There is no "tax break"-merely a change in where the contribution is made. British workers posted to India are similarly exempted.
Existing Precedent Ignored by Critics: Badenoch and Farage's complaints overlook that such similar tax agreements are normal in international commerce, intended to draw in brains and investment without placing home workers at a disadvantage. Abandoning this agreement would result in the cancellation of similar agreements with dozens of other countries.
Economic Win for Both Sides: The agreement will increase UK GDP, wages, and bilateral trade, and make the UK more competitive for highly skilled professionals-all without harming British workers.

In short, the "two-tier taxes" argument is political theatre, not economic reality. The agreement merely aligns India with long-standing UK practice, to the benefit of workers and businesses on both sides.

Sources: The Independent, BBC, Reuters