Prime Minister Sir Keir Starmer is facing sharp criticism over a new UK-India trade agreement that exempts Indian workers from paying National Insurance (NI) contributions for up to three years—a move opponents say creates a “two-tier” tax system that disadvantages British workers.
The exemption, known as a “double contribution convention,” is designed to prevent workers from paying social security taxes in both countries. Under the deal, Indian nationals temporarily working in the UK—and British nationals working in India—will not be required to pay NI in both jurisdictions for the first three years.
The provision, which was a central demand from Indian negotiators, is being hailed by New Delhi. However, the deal has sparked fierce political backlash in the UK. Critics argue the exemption is unfair to British taxpayers, particularly after Chancellor Rachel Reeves raised National Insurance contributions for UK workers and companies in an effort to shore up public finances.
“This is two-tier taxes from two-tier Keir,” wrote former business secretary Kemi Badenoch on X. “I refused to sign this deal because: Tax refunds for Indians not available to us. Visa requests too high. Ceramics and Aluminium industries would be screwed … When Labour negotiates Britain loses.”
This is two-tier taxes from two-tier Keir.
I refused to sign this deal because:1️⃣ Tax refunds for Indians not available to us
2️⃣ Visa requests too high
3️⃣ Ceramics and Aluminium industries would be screwed.
Andrew is 100% correct.
When Labour negotiates Britain loses. https://t.co/TiC3gOc21o— Kemi Badenoch (@KemiBadenoch) May 6, 2025
Shadow justice secretary Robert Jenrick also took aim at the agreement, accusing Starmer of putting British workers last. “This trade deal means Indian workers here for less than three years will not pay National Insurance in the UK,” he posted on X. “Starmer has hiked National Insurance on Brits while giving an exemption to Indian migrants. British workers come last in Starmer’s Britain.”
Despite the political storm, government officials maintain that the economic benefits of the trade deal will outweigh any cost to the Treasury. It remains unclear how many workers and businesses will benefit from the arrangement, or what the financial impact will be on UK public finances.
