The UK’s new trade agreement with India has ignited political controversy after internal Treasury analysis revealed it could cost the British government up to £200 million annually in lost tax revenues—while also making it easier and cheaper for Indian companies to send workers to the UK.
According to The Times UK, the deal includes a key concession granting Indian workers exemption from paying National Insurance contributions for their first three years in Britain. This provision, demanded by Indian negotiators to avoid “double taxation” on employees also contributing to India’s social security system, applies to the 20,000 Indian professionals who enter the UK each year through intra-company transfers. Critics warn it could incentivize Indian firms to increase their UK deployments.
Although Labour leader Sir Keir Starmer defended the agreement as a “historic” breakthrough, he faced mounting pressure over its implications for immigration and British workers. Starmer dismissed Conservative claims that the deal would undercut UK jobs as “incoherent nonsense,” arguing that similar tax arrangements already exist with over 50 other countries.
Trade Secretary Jonathan Reynolds echoed that defense, telling Times Radio that the deal would not raise immigration levels, calling concerns from Conservative and Reform MPs a “misunderstanding.” However, the deal does expand eligibility for the Global Business Mobility Visa from 15 to 33 occupations—including chefs, musicians, teachers, and yoga instructors—prompting fears from some quarters about a rise in foreign workers entering the UK.
Chris Philp, the Conservative shadow home secretary, accused Reynolds of misleading the public. “It is now clear that the government has opened the door to increased immigration under the guise of trade,” Philp said. “At a time when the public has called for migration to fall, this agreement will clearly expand it.”
While the full economic impact of the agreement remains uncertain, the Treasury report highlighted concerns that the NI tax exemption alone could erode the UK’s tax base without corresponding gains in high-value trade or financial services. Still, the government maintains that the overall deal will benefit the UK economy, with projected GDP gains of £4.8 billion by 2040 and major tariff cuts on British exports like whisky, chocolate, and automotive parts.
Starmer, speaking in Parliament, challenged opponents to explain whether they would undo similar deals with other countries. “This is the biggest trade deal since Brexit. If the Leader of the Opposition wants to tear it up, let them say so plainly,” he said.
