India-UK FTA and Double Contribution Convention take effect July 15
Union Commerce and Industry Minister Piyush Goyal announced on Sunday that the India-UK Free Trade Agreement (FTA) will come into effect on July 15, eliminating import duty on Indian goods entering the United Kingdom and introducing a Double Contribution Convention that safeguards social security benefits for Indian professionals working in the UK for up to five years.
"Only two days remain; today is the 12th. From the 15th, any goods exported from India to the United Kingdom will be welcomed there at zero import duty. This UK-India free trade deal brings new opportunities and immense possibilities for us all," Goyal told reporters in Mumbai.
Social security benefits for Indian workers
The minister highlighted the implementation of the Double Contribution Convention Agreement, also effective July 15, which benefits Indian professionals on temporary assignments in the UK. Under the previous system, around 25 per cent of their salary was effectively lost to local government contributions with no benefit to the worker.
"Regarding our young men and women who go there to work—often for two, three, or five years... previously, about 25 per cent of their salary was effectively wasted; the local government would take it, and the worker received no benefit from it. Now, we have finalised a 'Double Contribution Convention Agreement' that will also come into effect on the 15th," Goyal said.
According to Goyal, Indians working in the UK for up to five years will no longer lose that contribution. Instead, the 25 per cent of salary previously taken by the local government will now be deposited into their Provident Fund accounts in India. That money earns 8.25 per cent tax-free interest and serves as old-age support, ensuring social security for their families.
Broader impact of the trade agreement
Calling the agreement a major achievement, Goyal said it goes beyond merchandise trade. "I believe it is a testament to Prime Minister Narendra Modi's able leadership that the UK-India Free Trade Agreement not only addresses merchandise and goods and boosts the services sector, but also brings a significant gift for the thousands of people working and providing services there," he said.
The India-UK FTA aims to expand bilateral trade by reducing or eliminating tariffs on a wide range of goods while improving market access for services. Key Indian export sectors expected to benefit include textiles, apparel, engineering goods, gems and jewellery, marine products, and auto components, strengthening economic ties between the two countries.
The Double Contribution Convention prevents Indian professionals on short-term UK assignments from making social security contributions in both countries, reducing employment costs and improving long-term retirement savings.
