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UK-India Trade Deal Boosts Economy by £4.8 Billion, Sparks Controversy Over National Insurance Exemption

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Updated May 6, 2025, 10:05 PM

The UK government, led by Prime Minister Keir Starmer, has finalized a trade deal with India that includes a significant tax exemption for Indian workers temporarily in the UK. Under the agreement, these workers and their employers will not have to pay National Insurance contributions for three years, a move that has sparked controversy due to recent increases in National Insurance for British workers and businesses to address a £22 billion black hole in public finances. Critics, including Conservative Party figures like Robert Jenrick and Kemi Badenoch, have accused the Labour government of prioritizing foreign workers over British ones. Jenrick stated that 'British workers come last in Starmer's Britain,' while Badenoch criticized the deal for its 'two-tier taxes' and refused to sign it when she was in office, citing unfair visa demands and potential harm to UK industries like ceramics and aluminium. The trade deal is expected to boost the UK economy by £4.8 billion annually, increase wages by £2.2 billion, and enhance bilateral trade by £25.5 billion by 2040. It includes tariff reductions on various goods, such as whisky and gin, which will be halved from 150% to 75% and then reduced to 40% by the tenth year of the deal. Automotive tariffs will also be significantly lowered from over 100% to 10%. The deal will benefit the UK's trade with India's 1.4 billion people, with tariff reductions on 90% of exports and 85% becoming tariff-free within a decade. India has agreed to cut tariffs worth more than £400 million initially, which will more than double to around £900 million after 10 years, covering sectors like textiles, apparel, footwear, frozen prawns, medical devices, advanced machinery, and lamb. Despite the economic benefits, the National Insurance exemption has led to accusations of a 'two-tier tax system' that disadvantages British workers. The deal also includes provisions for easier visa access for certain Indian professionals like musicians, chefs, and yogis, adding to the controversy surrounding the agreement.

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Guido Fawkes

@GuidoFawkes

Row as Labour Exempts Indian Workers From National Insurance in Trade Deal https://t.co/KoGcB7leEi https://t.co/V4Fdwf11uc

GB News

@GBNEWS

Keir Starmer blasted for giving Indian workers a 'leg up' over the British in multi-billion pound trade deal: 'Labour negotiates, Britain loses!' https://t.co/nPcn9IBFmu

GB News

@GBNEWS

Sir Keir Starmer has just sold Britain to the Indians without a shot being fired, says Patrick Christys https://t.co/D126tlJ2Oj