Latest news with #UKIndiaDeal
The Independent
07-05-2025
- Business
- The Independent
Forget ‘two-tier tax' – the UK's India trade deal is a massive win
One benefit of Donald Trump ripping up agreements and driving a dagger into the world's trading system is that it has highlighted the benefits of free trade. Deals are getting done. The latest pact secured by the UK is with India, a truly enormous market, and one with huge potential for those able to access it. Talks had previously been stuck in quicksand, dragging on for three years. The rope that has pulled them out of the swamp? You could easily slap on a 'Made in Trump Towers' sticker. One of the key parts of the deal exempts workers on short-term visas from national insurance. They will only pay that in their home country; the reverse applies to UK workers in India. It is already being called a 'two-tier' arrangement that is more punitive for domestic taxpayers. Cue outrage, and claims that British workers are being 'sold out' because companies will supposedly be able to hire cheaper Indian staff in preference to the home-grown alternative. First off, take note of the word 'temporary'. This is a short term arrangement that applies for between one and three years. So, it will mostly cover people on secondment, not those coming over to fill posts over the longer term. Employers will still have to secure a visa, and that isn't easy. Ask them about dealing with the Home Office and they'll happily bang on for hours about the problems this causes them. There is still the points-based immigration system to satisfy, covering skills, ability to speak English and, crucially, annual income. The minimum is, in most cases, just under £39,000 per year, but there are also provisions based on the 'going rate' for a job. If that is, say, £45,000, then the worker being offered £39,000 won't qualify. If cheaper UK workers are available, the same rule applies. A similar NI concession already operates in a slew of existing trade deals the UK has signed with other countries. So this is nothing new and the fuss, designed to plug in to existing anxieties about immigration, is entirely confected. Even were that not the case, it bears repeating that deals require compromises and give on both sides. You don't get everything you want. But you could argue that the national insurance concession is not actually a negative anyway. It could serve as a hidden benefit if it helps employers to attract highly skilled workers in sectors where there are very obvious, and costly, shortages the domestic workforce is not able to fill. Tech would be a good example. The row is so patently fact free and ridiculous that it makes my head ache, particularly when one considers the overall benefits that could accrue from the deal. India is not an open market by global standards. This lifts barriers and represents a huge win when one considers that sheer size of the Indian market and the opportunities it presents. Just consider the explosive growth of the middle class there, its vast disposable income, and the opportunities improving access to it will offer UK companies. The government has estimated that bilateral trade will be boosted by £25.5bn with a badly needed net £4.8bn added annually to a UK economy that needs all the help it can get. It covers high end cars, booze, logistics, tech. The reduced tariffs on Indian goods coming into the UK should also lead to cheaper prices for consumers here. Set against this, the best its opponents can come up with is a fact-lite fuss about national insurance? This is what you get when the national conversation is dominated by noisy talking heads addicted to the social media outrage machine. Ultimately, free trade has been proven to be of benefit for those who practice it. The impact does need to be managed, and the UK has not always been good at that, which might partly explain why we are where we are. However, a cursory glance at the damage done by exiting the world's largest free trade zone – the EU and its single market – shows just how much damage turning one's back on it can do. It should be noted that while the agreement with India greatly eclipses the size of previous deals done with, say, Australia or New Zealand, and the numbers are big in terms of the sterling value, it is still projected to boost GDP by just 0.1 per cent. That is a tiny fraction of what the UK has lost through Brexit, which some estimates have put at as much as 4 per cent. Free trade is ultimately far superior to the protectionist alternative. But it appears that the case for it needs to be made again. The UK government should do that, forcefully.
Telegraph
07-05-2025
- Business
- Telegraph
Don't exempt Indian workers from NI, exempt everyone
Britain owes Indian Prime Minister Narendra Modi a debt of gratitude. Not only has he signed a deal expected to grow the UK economy by £5 billion a year, one which will increase trade between our two nations by 40 per cent. Tariffs on British car exports will be slashed by 90 per cent. UK food and drink will not pay any tariffs. Not only has this deal strengthened the case for free trade in an increasingly protectionist world, a timely reminder that removing barriers to trade is one of the most powerful drivers of prosperity, which allows countries to specialise, brings prices down for consumers, and encourages mechanisation and innovation. But this deal has exposed the great national insurance lie. Starmer has agreed to exempt Indian workers seconded to the UK from paying NICs for up to three years. The move has prompted accusations of a 'two-tier tax system' from 'two-tier Keir' and fears Britain will see an influx of Indian workers it cannot possibly sustain. Delhi has pointed out those workers won't be receiving any of the benefits NI is supposed to pay for, including pensions and welfare payments. What Delhi doesn't appear to realise is that British workers don't receive those benefits either, at least not in the way they are told. Since NI was introduced it has been framed as a contributory system. You work, you pay in and, at the end, can access the pot of money you've accumulated for retirement. This is hokum. Though politicians are loathe to admit it, NI isn't a saving scheme, it's a glorified second income tax. The money paid in by workers today funds the pensions of retirees today. Contributions aren't hypothecated, they're spent by profligate governments. And if you think the situation now, where £1 in every £8 of public spending is on the triple lock, is unsustainable, just wait until our 'worker: grey' ratio worsens. The NI agreement is being defended on grounds it amounts to double taxation, the exact same argument Rishi Sunak made last year when he pledged to set Britain on a path towards abolishing NI. At the time, Labour behaved as though such a move was the height of fiscal recklessness. Darren Jones, then shadow chief secretary to the Treasury, sniffed: 'Just like Liz Truss, you have so far refused to set out how you are going to pay for this latest shake of the magic money tree.' Who knew this Labour government would have such scruples about double taxation? Will they now change the levies on dividends, paid out by companies already subject to 25 per cent corporation tax? Or on the interest on savings which exceed the paltry allowance? Or on inheritance tax, the most egregious and widely despised form of double taxation? So my thanks to India, for giving Britain a post-Brexit boost and exposing our rotten, dishonest tax system. How superb that it is former Remainer-in-chief Keir Starmer who is seizing the great opportunities provided by our departure from the EU.
Yahoo
07-05-2025
- Business
- Yahoo
Don't exempt Indian workers from NI, exempt everyone
Britain owes Indian Prime Minister Narendra Modi a debt of gratitude. Not only has he signed a deal expected to grow the UK economy by £5 billion a year, one which will increase trade between our two nations by 40 per cent. Tariffs on British car exports will be slashed by 90 per cent. UK food and drink will not pay any tariffs. Not only has this deal strengthened the case for free trade in an increasingly protectionist world, a timely reminder that removing barriers to trade is one of the most powerful drivers of prosperity, which allows countries to specialise, brings prices down for consumers, and encourages mechanisation and innovation. But this deal has exposed the great national insurance lie. Starmer has agreed to exempt Indian workers seconded to the UK from paying NICs for up to three years. The move has prompted accusations of a 'two-tier tax system' from 'two-tier Keir' and fears Britain will see an influx of Indian workers it cannot possibly sustain. Delhi has pointed out those workers won't be receiving any of the benefits NI is supposed to pay for, including pensions and welfare payments. What Delhi doesn't appear to realise is that British workers don't receive those benefits either, at least not in the way they are told. Since NI was introduced it has been framed as a contributory system. You work, you pay in and, at the end, can access the pot of money you've accumulated for retirement. This is hokum. Though politicians are loathe to admit it, NI isn't a saving scheme, it's a glorified second income tax. The money paid in by workers today funds the pensions of retirees today. Contributions aren't hypothecated, they're spent by profligate governments. And if you think the situation now, where £1 in every £8 of public spending is on the triple lock, is unsustainable, just wait until our 'worker: grey' ratio worsens. The NI agreement is being defended on grounds it amounts to double taxation, the exact same argument Rishi Sunak made last year when he pledged to set Britain on a path towards abolishing NI. At the time, Labour behaved as though such a move was the height of fiscal recklessness. Darren Jones, then shadow chief secretary to the Treasury, sniffed: 'Just like Liz Truss, you have so far refused to set out how you are going to pay for this latest shake of the magic money tree.' Who knew this Labour government would have such scruples about double taxation? Will they now change the levies on dividends, paid out by companies already subject to 25 per cent corporation tax? Or on the interest on savings which exceed the paltry allowance? Or on inheritance tax, the most egregious and widely despised form of double taxation? So my thanks to India, for giving Britain a post-Brexit boost and exposing our rotten, dishonest tax system. How superb that it is former Remainer-in-chief Keir Starmer who is seizing the great opportunities provided by our departure from the EU. Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
Al Arabiya
06-05-2025
- Business
- Al Arabiya
UK and India clinch landmark trade deal in shadow of Trump's tariffs
India and the United Kingdom concluded on Tuesday a long-coveted free trade pact, in a landmark deal that represents London's most significant post-Brexit agreement that was finalized in the shadow of US President Donald Trump's tariff increases. The deal, between the world's fifth and sixth largest economies, has been concluded after three years of stop-start negotiations and aims to increase bilateral trade by a further 25.5 billion pounds ($34 billion) by 2040 with liberal market access and eased trade restrictions. 'These landmark agreements will further deepen our comprehensive strategic partnership, and catalyze trade, investment, growth, job creation, and innovation in both our economies,' Indian Prime Minister Narendra Modi said. The deal lowers tariffs on goods such as whisky, advanced manufacturing parts and food products such as lamb, salmon, chocolates and biscuits. It also agrees to quotas on both sides for autos imports. Both countries are also seeking bilateral deals with the United States to remove some of Trump's tariffs that have upended the global trade system, and the resulting turmoil sharpened focus in both London and New Delhi on the need to clinch a UK-India trade deal. 'We are now in a new era for trade and the economy. That means going further and faster to strengthen the UK's economy,' British Prime Minister Keir Starmer said. 'Strengthening our alliances and reducing trade barriers with economies around the world is part of our plan for change to deliver a stronger and more secure economy here at home.' The pact marks India opening up its long-guarded markets, including automobiles, setting an early example for the South Asian nation's likely approach to dealing with major Western powers such as the US and the European Union. Talks over a free trade deal between India and Britain were initially launched in January 2022, and became a symbol of Britain's hopes for its independent trade policy after leaving the European Union. But negotiations were stop-start, with Britain having four different prime ministers since that launch date and elections in both countries last year.
South China Morning Post
06-05-2025
- Business
- South China Morning Post
India, UK clinch landmark trade deal in shadow of Trump's tariffs
India and the United Kingdom concluded on Tuesday a long-coveted free trade pact, in a landmark deal that represents London's most significant post-Brexit agreement that was finalised in the shadow of US President Donald Trump's tariff increases. Advertisement The deal, between the world's fifth and sixth-largest economies, concluded after three years of stop-start negotiations and aims to increase bilateral trade by a further €25.5 billion (US$34 billion) by 2040 with liberal market access and eased trade restrictions. 'These landmark agreements will further deepen our comprehensive strategic partnership, and catalyse trade, investment, growth, job creation, and innovation in both our economies,' Indian Prime Minister Narendra Modi said. The deal lowers tariffs on goods such as whisky, advanced manufacturing parts and food products such as lamb, salmon, chocolates and biscuits. It also agrees to quotas on both sides for autos imports. Both countries are also seeking bilateral deals with the United States to remove some of Trump's tariffs that have upended the global trade system, and the resulting turmoil sharpened focus in both London and New Delhi on the need to clinch a UK-India trade deal. Advertisement 'We are now in a new era for trade and the economy. That means going further and faster to strengthen the UK's economy,' British Prime Minister Keir Starmer said.
