The recently finalised UK-India Free Trade Agreement is being sold as a triumph —promising billions in new trade and a “win-win” for both economies. But beneath the headlines lies a provision that risks inflaming division, undermining fairness, and feeding the very populism we as Liberal Democrats stand against.
Under this agreement, Indian workers on temporary assignment in the UK will be exempt from paying National Insurance contributions for up to three years. Crucially, their employers will also be exempt. In practical terms, this means a British worker earning £15 an hour, and their employer, will both be paying into our social safety net—the NHS, pensions, sick pay—while an Indian worker earning the same wage and their employer will not. That is not just a loophole; it’s a loaded gun in the hands of populists.
Unfairness that will not go unnoticed
Let’s be frank: this arrangement is grossly unfair. It creates a two-tier workforce, and British workers will feel it acutely. We already ask our citizens to contribute through National Insurance so we can collectively fund services like the NHS and social care. If they see others working here, earning the same wage, using the same roads, hospitals, and infrastructure—yet contributing nothing to the pot—they will rightly question why.
And it won’t take long for populist voices to weaponise this. “Foreign workers don’t pay into the system.” “British jobs undercut.” This isn’t dog-whistle politics—it’s a klaxon, and the government is ringing it. The Liberal Democrats have long championed internationalism, but we cannot let that blind us to how policies land on the ground in working-class communities.
This isn’t about being anti-India. It’s about ensuring that when you live and work her, whether for three months or three year, you contribute like everyone else. Anything less breaks the basic contract of fairness that holds our society together.
A direct undercut to British workers
The Liberal Democrat manifesto speaks proudly of our ambition to invest in people through education, retraining grants, and lifelong learning. We want young people in Britain, particularly in post-industrial and deprived regions, to have opportunities to thrive in a competitive world. But how does that vision hold up if employers are incentivised to hire temporary overseas staff who don’t come with the tax burdens of British workers?
Let’s be clear: this exemption makes it cheaper to hire an Indian worker than a British one, not because of skill or talent, but because one comes with lower costs to the business. Employers don’t pay National Insurance either. This is not innovation; it’s undercutting. It sends a devastating signal to our young workforce: you will always cost more, even when you are just as qualified.
We believe in a strong, open economy but not one that penalises our own people for simply being local. Internationalism without fairness is just another word for exploitation. The government should be closing loopholes, not creating them.
Trade must be fair and cohesive
We believe in open markets and global cooperation. But openness must be matched with equity. National Insurance exists for a reason. It funds our NHS, our maternity leave, our disability support. To exempt foreign workers and their employers from this responsibility, while expecting British workers to carry the full weight, is not progressive, it’s reckless.
If there is a genuine issue of double taxation between the UK and India, then the solution is bilateral reform not a one-sided giveaway that leaves British workers picking up the tab. This exemption won’t just save businesses money, it will cost us social cohesion, fuel cultural resentment, and hollow out trust in fair play.
Liberal Democrats must stand up now and say clearly: we welcome trade, we value partnerships, but we cannot and will not sacrifice fairness at home to chase headlines abroad. If you work here, if your company profits here, then you contribute here. That is the principle we should be defending.
* Mo Waqas is Chair of the Lib Dem’s Stockton branch and was the PPC for Middlesbrough and Thornaby East.
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17 Comments
Sadly Mo, I disagree. We already have reciprocal exemptions in regards to trade deals with other nations which are very similar to the one that’s was announced yesterday.
You say it’s a gift to populists – it would be if progressive politicians let that be the case. Sadly those politicians seem cowered in defending what is ultimately a benefit for both countries. This is an example of Labours dreadful Comms of late. Let’s embrace that deal – it’s not perfect , but then again what trade deal is.
Trade agreements will include some bits we like and some bits our co-signatories like. You have to look at them in the whole.
This aspect of the India deal sounds horrific because it helps Reform UK gain even more votes. Already Labour’s refusal to deal with inequality (jobs growth, winter fuel allowance, housing benefit etc) has helped Reform UK. In politics you can never predict the future but it looks as though this government is by default leading the nation down the path of continued populist surge.
Many have expressed hope that this trend will subside somewhat, but events like this (together with the mistake on planning reform on another Oped today) make me feel Reform UK are going to continue to win support and become unstoppable in spite of the contradictions and make-beliefs in their policies.
I disagree. The arrangement with India is not unfair.
Firstly, it is reciprocal. The same will apply to British workers posted to India.
My understanding of the arrangements based on brief comments in the Financial Times is as follows. In each case, the worker and their employer:
– remains liable to pay into their home country social security system.
– accrues no rights under the social security system of the country that they are posted to.
Such arrangements for temporary overseas postings are normal in treaties between countries to prevent double taxation.
Mo, is it not the case that this applies only to Indian workers who are on secondment to work in the UK *for an Indian company*? ie as I understand it they would be temporarily transfering from their company’s Indian office to it’s UK office (or other workplace). This would not apply to someone from India coming to the UK to work for a British company. So this would not mean, as you suggest, that any UK employer could save money by employing someone from India rather than someone from the UK. Isn’t this just meant to avoid a situation of an Indian worker on Secondment, and the Indian company they work for, having to make contributions to the social security systems of both contries at once? (Apologies if I have got this wrong. The reports of this have perhaps not made it clear enough)
Disappointed to read this . the UK has similar other agreement for staff on secondment with many other countries – all this is doing is adding India to the list.
The Leave campaign claimed that one great advantage would be the ability to reach new deals with other countries. Did they think India was just waiting to rejoin the Empire? If you are negotiating with a country twenty times your size this is on the good side of what is possible.
If the NI exemption only allows Indian Companies to temporary post Indian workers, then I think that is OK politically, subject to the impact on immigration being minimal and an effective deportation strategy for overstayers.
if the NI exemption allows “any” company to employ Indian Workers to the UK without paying NI then, to be blunt, Starmer may as well hand Farage the keys to Number 10 now. Likewise if the impact on immigration is large or there is no deportation strategy for overstayers.
I am not sure how this will play out.
“it won’t take long for populist voices to weaponise this. “Foreign workers don’t pay into the system.” “British jobs undercut.” This isn’t dog-whistle politics—it’s a klaxon, and the government is ringing it. ”
Here we go: “UK India trade deal scandalous” says Farage:
There are four countries who already have such an agreement with the United Kingdom, Canada, Chile, Japan and South Korea. And a number of European countries, including France, Germany and Switzerland, have similar agreements in place with India already.
Given that the temporary workers won’t have a claim on the UK benefits system and will continue to pay the NHS surcharge, misrepresenting this deal strikes me as unwise to say the least.
And, if nothing else, the Agreement allows us access to the growing Indian economy, growing by 5% plus per year as it currently does.
If we’d signed such a deal with the United States, Farage and his friends would have been hailing it from the rooftops.
Mark; It’s been standard procedure on existing trade deals for a considerable number of years. I can’t recall any objections then & mystified why this has been misinterpreted.
I have to admit , I’m disappointed with the party’s response to this. It should be welcomed .
Details have now emerged about this deal with India that make it sound much better than was the impression given at first. The national insurance exemption only applies to workers of Indian companies, workers will pay NHS surcharge and tax here, so why is our party giving the wrong impression?
I still think Reform UK will use this to its advantage saying the same about all the other similar deals, but we among others need to be giving the actual facts more clearly. Maybe the basic message to counter Reform is that these deals always involve give and take and overall bring benefits to everyone.
I must admit that I was absolutely shocked to hear this party echoing Farage (Reform) on this deal..
It’s sad, but true, that “a lie can run halfway around the world before the truth has got it’s socks on”.. Even more sad that this party was carrying Reform’s baton..
Trump-think is that the facts don’t matter, you can shout them down with your own lies whenever you want to. Time we abandoned Trump-think!
@Nigel Jones
It is rather sad that, despite the informed comments on here, Party HQ are still promoting a misleading press release (it’s one of the two on today’s email from the Party President): https://www.libdems.org.uk/press/release/uk-india-trade-deal-government-risks-undercutting-british-businesses-with-half-baked-national-insurance-plans
It makes me wonder why my membership subscription is funding people at HQ who don’t seem to be able to read or understand the text of the agreement. I don’t blame Daisy; it was probably one of the policy staff who wrote it for her.
As with Aus and NZ FTAs, it appears we aren’t immune to populist rhetoric to fearmonger about international agreements, it’s been a great shame that Daisy Cooper had come out opposing the DCC when it’s not unheard of and should be welcomed for allowing longer secondments both ways. Though I note Daisy has now taken down her initial tweets in response to the news, so hope that means a more rational statement is forthcoming and that we will be supportive of this trade liberalisation and securing greater environmental commitments from India!
If (as here) an Indian employee is still on the Indian company’s payroll (sent on deputation/assignment), Employees’ Provident Fund (EPF) contributions may continue, as the employment relationship in India still exists.
India has signed Social Security Agreements with several countries (like Germany, France, Australia, etc.). These agreements prevent double social security contributions and allow for exemptions from local contributions if the employee continues contributing to EPF in India (typically for short-term postings).
If an Indian employee is working in a country with a Social Security Agreement (SSA) they can continue contributing to EPF (if on Indian payroll) and get exemption from local social security.