India and the UK on Tuesday concluded a free trade agreement (FTA) and a double contribution convention or social security agreement that will benefit the IT sector.
Under this double contribution convention, Indian workers temporarily living in the UK need not have to pay national insurance contributions for three years. This means, according to the Ministry of Commerce, it will lead to savings of about 20% of their salary. It is also expected to benefit over 60,000 employees from the IT sector alone. It is said that benefits to Indian companies and employees will exceed Rs 4,000 crore.
Payments made by employers and employees to fund pensions, healthcare and welfare programmes are known as social security contributions. The UK is a significant market for Indian IT companies. In Q4FY25, Europe contributed 31.2% of Infosys' revenues. Infosys had a very strong growth in Europe in FY25. The company has made several investments and scaled up in different geographies in Europe. Wipro got about 27.1% of its revenues from clients in Europe. For TCS, the UK grew 1.2% in Q4.
Nasscom in a statement said that they are thankful to both governments for the inclusion of the Double Contribution Convention, which exempts Indian workers temporarily employed in the UK and their employers from paying social security contributions for a period of three years.
"By eliminating this double contribution burden, the agreement directly addresses a long-standing challenge faced by Indian Technology companies and other service providers operating in the UK," it said.
The FTA’s focus on digitally delivered services, professional services, and financial services aligns perfectly with the aspirations of the Indian technology sector. It opens up avenues for deeper collaboration in emerging areas such as artificial intelligence, cybersecurity, and digital transformation, while also creating a conducive environment for startups and innovators, Nasscom added.