INDIA IS SET to sign a series of social security agreements with foreign countries in order to secure “a better deal” for Indian nationals working abroad.
Bilateral social security agreements aim to protect the interests of Indian professionals by securing exemptions from social security contributions in the case of short-term contracts, provided they are covered under the Indian social security system and continue to pay their contributions to the Indian system during the period of contract.
According to the country’s ministry of overseas Indian affairs, the government has already approved the signing of agreements with Germany, Netherlands, Oman and Bahrain, while an agreement with France is also due for approval. India has already signed a social security agreement with Belgium.
Negotiations are currently being carried out with Switzerland, while discussions are scheduled with Norway and Sweden in the coming days.
Many countries have an umbrella social security system mandated by law, whereby there are mandatory contributions from all working people and their employers in order to provide multiple benefits such as old age pensions, disability insurance, health insurance and unemployment insurance.
Indian workers are often posted to these countries by their Indian employers on short-term contracts, and during this period they continue to make social security contribution in India as per Indian law. However, they are also compelled to pay contributions under the host countries’ legislation.
According to the ministry of overseas Indian affairs: “They do not get any benefit from the social security contribution made abroad, because most countries do not allow export of social security benefit. Most countries also have a minimum contribution period criteria, as a result of which, if a worker stays abroad for a lesser period, the contribution made by him is simply lost.
“Similarly, the self-employed Indians in these countries, despite having made contribution throughout their active life spent in these countries, get deprived of any benefits in case they relocate to India in old age,which is often the case. Another disadvantage is that due to the high rate of social security tax, the Indian companies become less competitive while bidding for projects in these countries.”
It is estimated that 25 million Indian nationals live overseas, spread across more than 110 countries. The community falls under two categories – persons of Indian origin (PIOs) and non-resident Indians (NRIs). The latter segment includes the various categories of overseas Indian workers such as unskilled, skilled, professionals and self-employed. Most of the lower skilled Indian workers are concentrated in the Gulf region and Malaysia. Professionals and selfemployed Indians are found mostly in developed countries like the EU member states, the USA, Australia, New Zealand, and Japan.
According to a statement from the ministry: “The future opportunities for overseas employment are considered high. At present about 54 per cent of the population of India is in the age group below 25 years. By 2020 India will be the world’s youngest nation with a workforce estimated at 820 million, as compared to 400 million today. On the other hand, the population of most of the developed countries is aging.
It continued: “Obviously, for their sustained economic growth these countries would need a large emigrant workforce in future. This migration is likely to be of short to medium- term duration, with migrants returning to their home country after completing the employment period.
“India is likely to become a major source of migrant professionals due to its vast reservoir of technically qualified manpower in sectors like information technology, engineering, health, finance and management".
