UK-India Free Trade Agreement

Katie Lam Excerpts

Monday 9th February 2026 Commons Chamber

[Katie Lam (Weald of Kent) (Con)]

The Indian Government are highly unusual in their approach to trade agreements. Unlike most other countries, India has a long-standing policy of using trade deals to try to secure favourable treatment in the immigration system. This deal, unfortunately, is no different. Under the terms of the agreement, Indian companies will be able to transfer their workers to this country far more easily and, once they are here, those workers will be able to avoid national insurance for up to three years, needing only to pay into the Indian social security system—payments that are, unsurprisingly, much lower than here in the UK. This national insurance holiday will make it much cheaper to hire Indian workers, especially in fields such as IT and engineering, than domestic talent.

Imagine a British IT firm is set to hire a computer programmer for £60,000 a year. On top of that, an employer must pay £8,250 in national insurance. That totals £68,250. To hire someone on the same salary, their Indian competitor would only need to pay about £1,470 to the Indian employee provident fund, to which mandatory contributions are capped at 15,000 rupees a month—about £120. That totals £61,470. Under the Government’s deal, it would, therefore, be at least 10% cheaper to hire an Indian worker than a British one. That is absurd.

[Iqbal Mohamed]

Does the hon. Member agree that employees of Indian companies who are sent here to work for three years and who then may stay on would normally not be paid the British salary level and would be happy to accept a lower salary? As well as saving on national insurance, these companies will be saving a lot more money by underpaying their employees.

[Katie Lam]

That is an important point because, as I am about to talk about, we have double contribution conventions with other countries, but not with other countries with economies like India’s where so many people—well north of a billion people—would be happy to do these jobs for much lower salaries than our workers at home would expect.

As I say, it is true that we have double contribution conventions with other countries. These aim to simplify intracompany transfers for international businesses. However, these agreements are usually struck with countries that have compatible economies, similar educational outcomes and comparable social security systems, such as Japan or Canada. India stands alone as by far the largest and least wealthy country on the list. In exchange for a deal with India, this Government have chosen to sell out skilled British workers who have worked hard to get where they are by allowing Indian firms to undercut them. We will see highly skilled British workers in cutting-edge fields, such as engineering, priced out by Indian workers. Given the relative markets and educational systems in the UK and India, we should not expect that always to be a like-for-like swap in terms of talent.

We have already seen this model take hold in the United States. There, Indian consultancy firms lease their workers to American companies, who are then able to pay an Indian worker far less than they would need to pay an American. The result has been a massive expansion in the number of lower-cost Indian workers at the expense of American workers. Most other countries are perfectly happy to strike trade deals without forcing us to undercut our own workforce. This Government should have expected India to do the same.

--- Later in debate ---

[Chris Bryant]

It will not be one second; that is an untruth.

On 25 October, we said that we will extend our ban on the import of oil products refined in third countries using Russian crude oil.

I will refer specifically to the constituent of my hon. Friend the Member for West Dunbartonshire (Douglas McAllister). It is that constituent’s 39th birthday today. My hon. Friend knows that I have met his constituent’s family. It is good that some of the charges against him have already been dealt with and he has been acquitted. We want to see the rest of the charges—I think another eight charges have been laid against him—dealt with as swiftly as possible. We make that argument to the Indian Government as frequently as we can. My hon. Friend did not refer to this, but I think he would agree that there should be a full investigation into his constituent’s allegations of torture. That is an important part of us maintaining an open relationship with India.

The hon. Member for Weald of Kent (Katie Lam) made a speech primarily about one specific issue. It was brief and to the point, for which I commend her—if only I could learn to do the same. She referred to the double contributions convention. I just point out to her that the previous Conservative Government made almost identical arrangements with a large number of countries, including Chile, Japan, South Korea, all of the EU, Iceland, Liechtenstein, Norway, Switzerland, Barbados, Canada, Jamaica, Mauritius, the Philippines, Bosnia and Herzegovina, North Macedonia, Serbia, Montenegro, Kosovo, Turkey and the United States of America. This deal will not undermine British workers—that is the Select Committee’s finding—and it will not make it cheaper to use Indian workers. This agreement is about highly skilled workers employed by Indian companies on a temporary basis paying contributions to their own country rather than in the UK. The deal has not finally been struck; negotiations are ongoing. That deal will be subject to its own process of going through the House, during which Members will be able to raise points.

[Katie Lam]

Will the Minister give way?

[Chris Bryant]

I will not, as I have only two minutes.

The Chair of the Select Committee made lots of good points. He referred to the Constitutional Reform and Governance Act 2010 and said that a votable motion was guaranteed by the then Minister in 2010. I was the Minister, and I am not sure that I then guaranteed a votable motion, but I take his point about greater scrutiny. When I come to talk about the Office of Trade Sanctions Implementation, I hope we will be able to deal with some of the other issues to which he referred.

The hon. Member for Arbroath and Broughty Ferry (Stephen Gethins) referred to higher education. I am delighted to say that higher education is one of the things that MFN applies to as part of the deal. I was proud that the Prime Minister was able to open two new higher education campuses in India when he visited in October. The hon. Member makes a fair point about the European Parliament’s good practice on trade deals, which I will reflect on.

I did not agree with everything that the hon. Member for Birmingham Perry Barr (Ayoub Khan) said, but I understood the sentiment with which he said it. I just make the point to him that the whole agreement is legally binding. That is why I am glad that we have secured chapters in our deal that have not been in any others.

The hon. Member for Dumfries and Galloway (John Cooper) said that Government figures seemed too low. One of the figures is probably too low, and that is because we tried to err on the conservative side. In particular, some of the figures presume that we will not be doing any additional trade as a result of the FTA, but I think that we will. I think we could say that we will do better.

The hon. and learned Member for North Antrim (Jim Allister) said that it was an enormous irony for a remainer such as myself to be standing here and proclaiming this. The thing is, I deal with the world as I find it, not as I would wish it to be. I cannot unmake the past, but I can make sure that we exploit the present to the best benefit of British business, and that is what this trade deal does.

Question put and agreed to.

Resolved,

That this House has considered the UK-India Free Trade Agreement.