India Presses for SSTA with US After Success of UK Double Contributions Convention

19 Nov India Presses for SSTA with US After Success of UK Double Contributions Convention

Posted at 19 Nov 2025 in Current Affairs by Ritik singh 0 Comments

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This article covers “Daily Current Affairs” and From India Presses for SSTA with US After Success of UK Double Contributions Convention

SYLLABUS MAPPING

GS- 2 – International Relations (IR)- India Presses for SSTA with US After Success of UK Double Contributions Convention

FOR PRELIMS

Why is India seeking a Social Security Totalisation Agreement (SSTA) with the United States?

FOR MAINS

What challenges are stopping India and the US from signing a Social Security Agreement?

Why in the News?

India has renewed its demand for a Social Security Totalisation Agreement (SSTA) with the United States during the ongoing Bilateral Trade Agreement negotiations. This push aims to resolve the long-standing problem of double social security contributions paid by Indian professionals working temporarily in the US. The development gains significance as it comes soon after India successfully concluded a similar Double Contributions Convention (DCC) with the United Kingdom, giving fresh momentum to India’s efforts to secure comparable agreements with major partner countries.

Background: India’s Totalisation Push

India has been actively entering into agreements with major partner countries to protect the interests of its overseas workforce. Such agreements ensure that workers do not contribute simultaneously to social security systems of both the home and host countries, and that their contributions remain portable.
The recent DCC with the UK under the Comprehensive and Economic Trade Agreement (CETA) has strengthened India’s negotiating position with the US and demonstrated its readiness to harmonise social protection commitments.

The DCC Agreement with the United Kingdom: Key Features

Signed on 24 July under CETA, the India–UK Double Contributions Convention includes:
1. Exemption from UK social security contributions for Indian employees on temporary assignments (up to three years).
2. Benefit expected for around 75,000 Indian workers and 900+ companies operating in the UK.
3. Estimated savings of over ₹4,000 crore for employers and employees combined.
4. Ensures mobility of skilled professionals and provides financial relief for Indian firms operating in global value chains.
This agreement serves as a template for India’s proposal to the US.

What is a Social Security Totalisation Agreement?

A Totalisation Agreement coordinates social security systems of two countries. Its objectives include:
1. Avoidance of Double Contributions: Workers contribute only to one social security system—usually their home country’s—during short-term postings abroad.
2. Portability of Social Security Benefits: Workers can recover or transfer their accumulated contributions if they do not meet eligibility requirements abroad.
3. Protection of Temporary Workers: Prevents financial loss for professionals on short-duration visas who cannot complete the minimum contribution period for benefits.
4. Promotes Trade and Labour Mobility: Facilitates cross-border movement of talent, boosting bilateral economic engagement.

The US Context: Why India Seeks an Agreement

Indian workers in the US—mostly on H-1B and L-1 visas—face significant social security contribution losses:
1. They contribute around $3 billion every year to the US Social Security system.
2. Over the last decade, total contributions have exceeded $27.6 billion.
3. However, US law requires 40 quarters (10 years) of contributions to qualify for benefits.
4. Most Indian professionals stay for 3–6 years, making them ineligible for social security withdrawals.

India’s Preparedness and Reform Measures

1. National Social Security Data-Pooling Exercise: India consolidated national social protection data to address US concerns with transparent, evidence-based assessment.
2. Expanded EPF and Social Protection Coverage: Formal social security coverage rose from 19% (2015) to 64.3% (2025) (ILO), reflecting wider inclusion and labour formalisation.
3. Labour Codes Reforms: The Code on Social Security, 2020 unified nine social security laws, creating a streamlined, modern, and verifiable framework.
4. e-SHRAM Registration Drive: Over 29 crore unorganised workers registered on the e-SHRAM portal, improving traceability and widening coverage.
5. Strengthening ESIC Infrastructure: Expansion of ESIC hospitals and dispensaries improved health protection, showcasing comprehensive social security readiness.
6. Universal Account Number (UAN): UAN ensured portability and transparency in EPF accounts, aligning India with global portability standards.
7. Improved Compliance Systems: Digital inspections, unified filings, and Aadhaar-based verification strengthened monitoring and reduced compliance gaps.

Challenges in Reaching an Agreement

1. Concerns Over India’s Social Security Coverage: The US remains cautious due to gaps in India’s informal sector coverage, differing benefit structures, and questions over portability and enforcement standards.
2. Political Sensitivity in the US: Exempting foreign workers from social security contributions is politically contentious, especially in an election-driven environment.
3. Large Volume of Indian Workers: The high number of Indian professionals in the US makes harmonisation complex and raises concerns about administrative burden and financial implications.
4. Low Reciprocity for the US: Very few American workers are employed in India, leading to the perception that the benefits of the agreement would heavily favour India.
5. Differences in Social Security Frameworks: Variations in contribution rates, benefit periods, eligibility norms (e.g., 40-quarter rule), and pension portability complicate alignment.
6. Bureaucratic and Negotiation Hurdles: Long-standing negotiations, slow inter-agency coordination, and differing priorities in trade talks delay finalisation of the agreement.

Way Forward

1. Strengthening Domestic Social Protection Systems: Continued reforms in EPF, ESIC, and universal social security schemes will boost India’s credibility and address US concerns.
2. Deepening Diplomatic Engagement: India must leverage platforms like TPF, iCET, and strategic dialogues to push the agreement as part of the broader trade and mobility framework.
3. Active Stakeholder Consultations: Regular engagement with IT, services sectors, and industry bodies like NASSCOM will help build a unified negotiation position.
4. Offering Flexible, Phased Implementation: India can propose differentiated rules for short-term vs. long-term workers, a step-wise rollout, and strong compliance protocols to reassure the US.
5. Data-Driven Confidence Building: India should present clear evidence of expanded social security coverage, digital monitoring, and improved enforcement supported by independent verification (e.g., ILO).
6. Aligning With Global Best Practices: Showcasing successful social security agreements with countries like Australia, Canada, Japan, and Germany can help demonstrate India’s readiness to uphold commitments.

Conclusion

India’s proposal for a Social Security Totalisation Agreement with the United States reflects its broader vision of protecting the global Indian workforce and creating a fairer, more predictable framework for labour mobility. With growing alignment in India–US trade, technology, and strategic cooperation, resolving this long-standing issue would mark a major step forward. Although challenges remain—especially regarding social security harmonisation and political sensitivities—the ongoing negotiations indicate strong intent on both sides to find an equitable solution.

Prelims question:

Q. Consider the following statements regarding a Social Security Totalisation Agreement (SSTA):
1. It prevents double social security contributions by allowing temporary workers to contribute to only one country’s system.
2. It enables portability of social security benefits across countries.
3. Under US law, Indian temporary workers automatically receive a refund of their social security contributions after they return to India.
How many of the statements given above are correct?
(a) Only one
(b) Only two
(c) All three
(d) None

Answer: B

Mains Question:

Q. India has renewed its push for a Social Security Totalisation Agreement (SSTA) with the United States to address the issue of double social security contributions faced by Indian professionals. Discuss the significance of such an agreement, the challenges involved in its conclusion, and the way forward for India and the US.

(250 words)

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