Boost for contractor recruitment in India

contractor recruitment India

21st May 2021

Following a virtual summit between British prime minister Boris Johnson and Indian premier Narendra Modi to discuss a potential free trade agreement (FTA), there was some exciting news for young professionals. Up to 3,000 young professionals aged 18-30 will be able to freely live and work in each country for up to 24 months, creating much-needed job opportunities and greater potential for recruitment agencies to place more contractors in India when it is safe to do so.

This is an important development in the trade relations between two commonwealth countries that share such a rich history. Known as the ‘Young Professional Scheme’, the initiative will be similar to other programmes available to other countries such as Japan, South Korea, New Zealand, Hong Kong and Australia.

Summing up the benefits of the partnership, British Home Secretary Priti Patel said, “This landmark agreement with our close partners in the Government of India will provide new opportunities to thousands of young people in the UK and India seeking to live, work and experience each other’s cultures.”

With both economies able to offer a myriad of job roles and boost the career prospects for global contractors looking to work in India, the move is yet another example of cross-country collaboration that allows for skilled professionals to not only experience life in another country but also develop strong professional networks on a global scale.

Those individuals selected for the scheme must travel independently without any family members and must also have at least three years’ relevant training at university level or equivalent. Those coming to the UK must also have £2,530 in savings. An important pre-requisite is that they are able to “express themselves in the language(s) of the host country”.

Aside from the shared democratic values and commonwealth ties, the scheme is part of an agreement for the UK and India to cooperate more closely on a number of key areas such as health, climate, trade, education, science and technology. The benefits are evident, with both countries seeking to cement and build trade deals to create jobs and provide opportunities for the new generation of young workers.

India has suffered greatly as a result of the pandemic with Johnson adding that the “British people have stepped up in their thousands to support our Indian friends during this terrible time in a demonstration of the deep connection between the UK and India”. The UK recently sent £6 million worth of medical supplies to India to help in its battle against COVID-19.

Increased demand for contractor recruitment in India

As well as a number of investment and export deals, the Enhanced Trade Partnership between the two allies will create 6,500 jobs in the UK as a result of the £1 billion UK-India trade investment announced by the two governments. The package includes £533 million of new Indian investment into the UK, of which £200 million is earmarked for low carbon growth.

The bilateral trade agreement aims to more than double the current £23 billion of activity between the two countries by 2030. Importantly, there will be many more opportunities for recruitment businesses and international contractors with an investment stimulus for both economies, particularly in key sectors such as digital and tech.

“As leaders in tech and innovation this enhanced partnership will unlock opportunities for businesses, boost job creation and growth across the country,” said Indian born Lord Karan Bilimoria CBE, the founder and Chairman of Cobra Beer and president of the Confederation of British Industry (CBI).

Non-residents in India will have to pay tax if transactions exceed ₹2 crore

While the new collaboration between the UK and India will create opportunities for contractors in India, recruitment agencies must also be wary of recent taxation changes.

The Central Board of Direct Taxes, India’s tax authority, has declared that transactions by non-residents of over Rs 2 crore or two million Indian Rupees (c. £19,260), whether goods, services, property, download of data or software, will be subject to income tax. The new provisions of the Significant Economic Presence (SEP), first introduced in 2018, and which come into effect for the 2021/22 tax year, stipulate that any business activity over 3 lakhs or 300,000 Rupees (c. £2,890) carries a tax liability. These measures were introduced to claw back tax from businesses that don’t have a physical presence in the country and are dealing in digital assets as a way to avoid tax.

Agencies must ensure compliance with local tax and employment regulations

Whenever placing international contractors abroad, recruitment agencies must ensure they comply with local tax and employment regulations or face potential criminal charges or fines. Compliance is key and the tax status of contractors must be thoroughly understood to avoid incurring significant penalties, damaging your reputation as a business and its trading prospects in India and indeed any other country.

Want to find out more about compliance for contractors? Our 6CATSPRO experts can also advise and guide your recruitment agency on areas such as training, contract management, strategy and risk management. Contact them today.



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