Social security pact to add Rs 18,000 crore per year to desi pockets

NEW DELHI: The US on Sunday agreed to take the fi rst step in addressing India’s long-pending demand of signing a Totalization Agreement that will help Indian workers in the US get annual refunds of around $3 billon (Rs 18,000 crore) worth of social security contributions they make.
The issue has been pending for years as the US has failed to recognize either the contributions made to the Employees Provident Fund or the National Pension Scheme as a valid social security contribution in India.
As a result thousands of software and other professionals lose out on the money they contribute to the US scheme while being stationed there. “Both sides agreed to hold a discussion on the elements required to pursue an India-US Totalization Agreement,” a joint statement issued after a meeting between PM Barack Modi and President Barack Obama said.
Strengthening trade, economic and investment relations was the centrepiece of talks, apart from cooperation in strategic and defence sectors. Obama and Modi are due to jointly address Indian and US chief executives on Monday evening to signal improved relations.
There was some evidence of it in the joint statement, which stayed away from contentious issues such as visas and import restrictions and reiterated the importance to “providing transparent and predictable policy environments for fostering innovation” in what was an oblique reference to the intellectual property rights regime, which has emerged as an irritant.
Apart from social security the two leaders sought to “assess the prospects for moving forward with high-standard bilateral investment treaty (BIT) discussions given their respective approaches”, a statement that recognizes that an agreement may be tough given the different positions but the two will still have a shot at it to boost investment.
Talks on BIT had come to a halt a few years ago after the UPA decided to review all treaties in the wake of a flurry of disputes by investors disgruntled by government policies, ranging from cancellation of “illegal” telecom licences by the Supreme Court and the retrospective tax regime ushered in by Pranab Mukherjee as the finance minister.
Officials, however, said that the model BIT, which will be taken up by the Union Cabinet over the next few weeks, has sought to further tighten the loopholes and make the regime tougher, something that may not be palatable to the US administration.