Sangeeta Khorana, Professor of International Trade Policy at Aston University, told The i Paper it’s an “ambitious and momentous deal.”
The deal was three years in the negotiating and marks a new chapter between the world’s fifth and sixth largest economies in a world destabilised by the whims of US President Donald Trump.
But by Wednesday morning, the Government was forced into a defensive crouch over its plans after the Tories and Reform UK said British workers would be undercut by an agreement for some Indian nationals to pay less tax.
The UK has similar tax arrangements with other countries and blocs, including the US, EU, Canada, and Japan. Known as a double contribution convention, it’s based on the principle that workers shouldn’t be paying twice for social security taxes that they will not benefit from. Indian workers and businesses based in the UK will still have to pay the equivalent tax in India, as well as sponsorship fees and an NHS surcharge.
So far, so reasonable. Right? Not if you look at some of the reactions.
Instead, the double taxation agreement overshadowed the deal, which had been intended as positive news for Starmer as he attempts to recover from poor local election results and show progress on his overriding priority of boosting economic growth.
The trade deal with India will raise living standards, put more money in the pockets of British working people, and deepen the unique ties between our two nations. pic.twitter.com/TAXsPPN9Pv
— Keir Starmer (@Keir_Starmer) May 6, 2025As Allie Renison, a trade expert who has advised Government, pointed out, under a Conservative-Liberal Democrat coalition in 2012, the UK and Chile signed an agreement exempting temporary workers from social security contributions for five years.
But, in politics timing is everything and the momentum is with Reform UK even if their attack line is disingenuous. Far from being a two-tier deal, surely this could arguably be seen as a key benefit of Brexit? Not if you put the radio on.
The Conservatives followed suit, and you have only to look at the polling to see why. A fresh YouGov survey released Wednesday put Reform at 29 per cent, up three points from last week and the Tories are down three points to 17 per cent, their lowest rating since 2019. Labour are on 22 per cent.
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This is Keir Starmer's 'Thatcher, milk snatcher' moment
Read MoreCome Prime Minister’s Questions at noon, Starmer had worked himself up into a fury. “The criticism on the double taxation is incoherent nonsense. It’s a benefit for working people. It’s in the agreements that we’ve already got with 50 other countries. And if the member for Clacton or the Leader of the Opposition [Farage or Badenoch are] 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.
Another Labour MP remarked gloomily: “The comms on this have been a mess as they have been from the start. Maybe No 10 was simply blindsided by the politics of this because it’s what happens in all of the trade deals, but the world has changed after last week” [at the local elections when Reform won lots of council seats].
With a US economic deal perhaps as soon as this week – although next week is looking more likely – and a reset with the European Union in the next fortnight, the Government has a series of potentially significant stories to sell. How well they can tell them is the concern for the wider Labour Party.
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