Keir Starmer faces criticism for allegedly creating a two-tier tax system that benefits Indian migrants while raising National Insurance for British workers. The Tory shadow justice secretary, Robert Jenrick, highlights this perceived disparity as unfair to British citizens.
The UK-India trade deal includes reductions in tariffs on various goods, boosting the UK economy by an estimated Ā£4.8 billion by 2040. A "double contribution convention" prevents double taxation on National Insurance for Indian workers temporarily in the UK for three years. This provision, however, is contested, with critics arguing it incentivizes hiring Indian workers over British ones.
While the government claims the impact will be limited to a small number of workers, they have not released detailed data on the number of affected individuals. The number of work visas issued to Indians in 2024 was 81,000, but it is unclear how many of these individuals will benefit from the tax exemption.
The trade deal is currently undergoing parliamentary scrutiny and is not expected to come into effect for another year. The government's refusal to release data on the number of Indian migrants who will benefit from the tax concession remains a point of contention.
Robert Jenrick, the Tory shadow justice secretary, said: āStarmer has hiked National Insurance on Brits while giving an exemption to Indian migrants. British workers come last in Starmerās Britain.ā
But Labour accused Mrs Badenoch on Tuesday of ādesperately seeking to distract from her failureā in the local elections with a āmade-up row about a standard tax agreementā.
Government figures involved in the deal said there were no changes to broader migration rules as a result of the trade agreement and claimed the terms of the deal would only apply to a relatively small number of Indians transferring jobs from their home to the UK.
They added that India was granted no extra student visas, as once floated, and said the UK already has 17 such deals with countries such as America and South Korea and with the European Union. The alterations were framed by the Government as improving ābusiness mobilityā.
Narendra Modi, the Indian prime minister, said: āThese landmark agreements will further deepen our comprehensive strategic partnership, and catalyse trade, investment, growth, job creation, and innovation in both our economies.ā
The deal between the worldās fifth and six largest economies will boost the size of the UK economy by Ā£4.8 billion by 2040, according to the UK Governmentās own estimates, though that is just 0.1 per cent of total GDP.
Indian tariffs on UK whisky and gin exports will drop from 150 per cent to 75 per cent and then to 40 per cent after a decade in what the industry called a āonce in a generationā breakthrough.
UK officials also pointed to Indiaās reduction of whisky and gin tariffs and the reduction of automotive tariffs from 100 per cent to 10 per cent, with a quota, as a significant step forward.
India in turn won reductions to UK tariffs on clothes, footwear and food products such as prawns. The Government argued this would lower costs for British consumers.
While the terms of a deal have been struck, a signing ceremony is needed on the formal paperwork, which is yet to be published as well as a period of parliamentary scrutiny, meaning it is not expected to kick in for a year.
The most contentious aspect has been the striking of a ādouble contribution conventionā, designed to make sure one worker does not pay National Insurance in two countries at the same time.
It will stop Indian workers temporarily in the UK and their employees from paying National Insurance contributions for three years. British workers moved to India similarly benefit.
The Government declined when pushed on Tuesday to say how many Indian migrants would benefit from the concession.
The Indian government in a press release about the trade deal said the figure would be ālargeā, while critics have argued that the change makes it more attractive for Indian companies to send workers to the UK rather than hire British workers.
The UK Government admitted on Tuesday it had internal analysis on the numbers affected but ā despite growing calls for clarity from politicians ā refused to publish those numbers.
The number of work visas issued to Indian nationals in 2024 was 81,000, but it is thought only a fraction of those would benefit.
Indians are now able to apply for 33 different work sectors via the Global Business Mobility Visa, up from 15.
Indian chefs, musicians, yoga instructors will be able to apply to work in the UK for the first time, but the annual number of approvals will be capped at 1,800.
It was reported on Tuesday that British car makers could be shielded from the full force of Donald Trumpās tariffs, with Sir Keir nearing a separate trade pact with the US.
The proposed deal, which insiders suggest could be signed this week, would grant lower tariffs on car and steel exports up to an agreed quota.
Critics of Sir Keirās premiership have already been campaigning against the decision in the Autumn Budget to raise Ā£25 billion by increasing National Insurance on businesses.
The Prime Minister is also under pressure to reduce immigration numbers after Reform, which has called for a much tougher border stance, won control of 10 councils in last weekās local elections.
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