LONDON, February 2026 — The UK Parliament became a battlefield today as opposition members unleashed a scathing critique of the newly minted UK-India Free Trade Agreement. What the government heralded as a “fine tandoori” of a deal was dismissed by critics as a “bag of soggy papadoms” that threatens to undermine the domestic workforce.

At the heart of the clash is a controversial provision that allows Indian IT and engineering firms to bypass local taxes, a move critics say effectively “sells out” skilled British workers.

The National Insurance Loophole

The primary flashpoint of the debate is a specific exemption regarding National Insurance (NI) contributions. Under the agreement, Indian workers transferred to the UK will not be required to pay a single penny in British NI for up to three years. Their employers are also exempt from these payments, needing only to contribute to the Indian Provident Fund—where mandatory contributions are capped at a fraction of UK costs.

Opposition members calculate that this creates a “two-tier tax system” where it becomes roughly £10,000 per year cheaper for a company to hire a software developer from India than a British citizen for the same role.

A Model of “Labor Arbitrage”

Critics warned that the UK is importing a controversial American model. In the U.S., Indian consultancy firms lease workers to domestic companies at rates far below local salaries. By removing tax barriers, the UK government is accused of facilitating a massive expansion of lower-cost Indian labor at the expense of domestic professionals.

“This isn’t a level playing field,” argued one MP, noting that while the UK has similar deals with Japan or Canada, those are “compatible economies.” India stands alone as a nation of 1.5 billion people where the cost of living and salary expectations are vastly different, allowing for extreme “arbitrage”.

The Government’s Defense: High-Growth Ambitions

The government defended the deal, pointing out that it is supported by major institutions like HSBC, Standard Chartered, and the Federation of Small Businesses. They argued that the Indian economy is growing five times faster than the European Union, and the UK cannot afford to be left behind.

To counter the “cheap labor” narrative, the government highlighted that Indian workers still face significant costs, including:

• £3,150 in NHS surcharges.
• Up to £769 in visa fees.
• A £3,000 immigration skills charge paid by the employer.

Bottom Line

The UK-India trade deal was supposed to be a post-Brexit triumph, but it has instead exposed deep anxieties about globalization. While the government sees a gateway to the world’s fastest-growing market, the opposition sees a “race to the bottom” where British engineers and scientists are priced out by a deal that prioritizes corporate interests over local livelihoods.