India to have social security pact with France

September 18th, 2008 - 8:46 pm ICT by IANS  

Manmohan SinghNew Delhi, Sep 18 (IANS) Ahead of Prime Minister Manmohan Singh’s visit to France this month, the Indian cabinet Thursday approved the text of a social security agreement that will benefit nationals working on short-term contracts in each other’s territory.The text had been finalised in August and is expected to be signed during the prime minister’s visit September-end in Paris.

India has already signed a social security agreement with Belgium, with similar deals approved for Germany, the Netherlands, Oman and Bahrain.

While negotiations are on with Switzerland, India will be starting talks with Norway and Sweden for social security agreements within a few days.

There are currently about 285,000 Indians in France, most of them professionals and self-employed persons.

The agreement will allow Indian workers in France, on a short-term contract of up to five years, to avoid double social security contributions, as well permit the portability of social security benefits on relocation.

Further, it will also take in account the total period of employment in the second contracting state for determining the eligibility for social security benefits.

“Indian workers shall be entitled to the export of the social security benefit if they relocate to India after the completion of their service in France,” said a statement by the Ministry of Overseas Indian Affairs.

Self-employed Indians would also be entitled to export of social security benefit on their relocation to India.

The need for such agreements had become imperative, with more and more Indian professionals sent for short-term work to the developed nations.

Most of these countries have a comprehensive social security system, funded through compulsory contributions from all working people and their employers.

Currently, Indian workers posted by their Indian employers in France have to make social security contributions under both Indian and French laws. At the same time, they do not get any benefit from the social security contributions made abroad, as they cannot be exported.

In case of self-employed Indians, they lose out the benefits, once they relocate to India in their old-age, as they often do.

Besides, Indian companies become less competitive while bidding for projects in these countries due to the high rate of social security tax.

“Such (social security) agreements would also make Indian companies more competitive since exemption from social security contribution in respect of their employees substantially reduces costs,” said the ministry of overseas Indian affairs in a statement.

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