'Incoherent nonsense': Keir Starmer defends UK-India FTA amid opposition criticism over tax exemptions

British Prime Minister Keir Starmer on Wednesday came out fighting against Opposition criticism over a double taxation clause in the Free Trade Agreement (FTA) with India, designed to prevent temporary workers paying in social security contributions in both countries. The Double Contribution Convention, one of India's key asks in the trade deal negotiations concluded on Tuesday, means Indian workers seconded to Britain will not have to pay National Insurance contributions for the first three years - an exemption which also applies to British workers in India.

However, the UK Opposition Conservative Party dubbed this as "two-tier taxes" that would unfairly benefit Indian workers while costing the UK Treasury millions of pounds.

"The criticism on the double taxation is incoherent nonsense," Starmer told the House of Commons.


"It's a benefit to working people. It's in the agreements that we've already got with 50 other countries. And if the Leader of the Opposition is seriously suggesting that they're going to tear up agreements with 50 other countries, create a massive hole in our economy, they should get up and they should say so," he said.

He was reacting to Tory leader Kemi Badenoch taking to social media to claim the India FTA was the same flawed deal she had refused to sign as former business and trade secretary soon after the Labour government declared it a "landmark" pact on Tuesday.

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"This is two-tier taxes from two-tier Keir. 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," said Badenoch.

Her party leadership rival, shadow secretary of state for justice Robert Jenrick, also attacked the deal because it "means Indian workers here for less than three years will not pay National Insurance in the UK".

"Starmer has hiked National Insurance on Brits while giving an exemption to Indian migrants. British workers come last in Starmer's Britain," said Jenrick.

Among the other Opposition parties, Liberal Democrat deputy leader Daisy Cooper said the exemption risked "undercutting British workers at a time when they're already being hammered by Trump's trade war and Labour's misguided jobs tax".

"This government doesn't give a damn about working people," added anti-immigration Reform party leader Nigel Farage, who dubbed the deal as "truly appalling".

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UK Business and Trade Secretary Jonathan Reynolds, who had finalised the deal with Commerce and Industry Minister Piyush Goyal during his London visit last week, hit back at the criticism to stress that British workers were not being "undercut" by a tax convention most recently signed with Chile by the then Tory government.

"No British worker is being undercut by this. I would never do a deal that undercuts British workers," Reynolds told 'Sky News'.

"This is not a tangible issue. This is the Conservative Party and Reform, unable to accept that this Labour government has done what they couldn't do and get this deal across the line and inventing a false reason why they couldn't get this across the line," he said.

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The FTA negotiations with India were opened in January 2022 by the then Boris Johnson led Conservative Party government before being paused last year for general elections in both countries.

The Starmer-led Labour government restarted the talks in February, a process which came to a close on Tuesday with Prime Minister Narendra Modi inviting his UK counterpart to India for the formal sign off in the coming weeks.

The deal is expected to increase bilateral trade, which stands at GBP 41 billion a year, by an additional GBP 25.5 billion annually by 2040 with trade tariffs being cut significantly on both sides.