India-UK FTA unlocks services boom for professionals, govt explains key benefits

India's historic Free Trade Agreement (FTA) with the UK has secured unprecedented market access for Indian professionals and service providers. The services sector, a strong driver of India’s economy, will also see wide-ranging benefits, from greater market access in IT and IT-enabled services, financial and legal services, to professional, educational, and digital trade. Indian professionals, including those deployed by companies to work in the UK, as well as those on contracts such as architects, engineers, chefs, yoga instructors, and musicians, are all set to benefit from simplified visa procedures and liberalised entry categories, making it easier for talent to work in the UK.

Following the signing, the Ministry of Commerce has released detailed explanations outlining key provisions and expected gains for Indian businesses and workers.

On the opening of key segments of the services economy to British firms:

While India has made commitments on market access across 108 sub-sectors in services, the UK has made commitments across 137 sub-sectors, which practically cover more than 99% of India’s exports. All key areas of India’s interest are covered, such as IT, business services (including management consultancy and advisory), professional services (including accountancy and engineering), telecom, financial services, education, and health. Both in terms of width and depth of coverage, the UK’s commitments are much deeper.

On the need to establish a local presence or entitlement to national treatment:

As in market access, the UK’s national treatment commitments are spread across 137 sub-sectors vis-à-vis India’s 108 sub-sectors. Furthermore, both parties have agreed to engage in mutual recognition of qualifications in a time-bound manner. This is a big win for India, as this is an area of India’s strength. India has a trade surplus of over $5 billion with the UK on professional services (exports of $5.8 billion and imports of $600 million), and thus has the scope to enhance it further. Considering the current trade and India’s skilled talent pool available on a large scale in different professions such as nursing, accounting, architecture, dental, and other services, India will significantly gain from this engagement.

Is the UK’s services offer to India more cautious and limited in scope?

The UK’s commitments on mobility are very significant and will greatly benefit India’s service providers. They are also by far the best it has offered in any FTA. The UK has provided an assured regime for temporary entry and stay requirements for various categories of natural persons like business visitors; intra-corporate transferees; contractual service suppliers; independent professionals; investors; and partner and dependent children of intra-corporate transferees (with the right to work).

The UK has offered mobility commitments in 33 sub-sectors under Contractual Service Suppliers, which include IT, business services, and professional services. It has also offered commitments in 16 sub-sectors under Independent Professionals, which include computer and related services and research and development services. The UK has also agreed not to impose numerical restrictions or Economic Needs Test requirements for the temporary entry of natural persons into its territory.

On the Double Contribution Convention and a comprehensive totalisation agreement:

The DCC is a permanent agreement, which is not a temporary fix. It covers the most important element of the avoidance of double contributions, exempting employees of Indian companies in the UK from contributing to the UK system.

Earlier, Indian employees and their employers were contributing around 20% of their salary to the UK’s National Insurance System without any benefits in return.

The DCC will ensure that workers of both countries, when working temporarily in each other’s territory, do not have to pay double contributions towards their social security.

This will benefit over 75,000 Indian workers and over 900 employers by exempting Indian professionals and their employers from these contributions in the UK for a stay of up to 36 months. Indian companies and employees will save significant sums of money, thereby enhancing their competitiveness. Various industry estimates suggest an annual saving of more than $500 million on this account.

Does the UK’s services package show reluctance to ease mobility for Indians?

Overall, the UK’s services package is deep, comprehensive, and is by far the best it has been in any FTA. It is in line with India’s interests and requirements and will provide a significant boost to India’s services exports.