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Moves to end unfair overseas social security

business Updated: Dec 15, 2009 20:28 IST
Vivek Sinha

The government is stepping up efforts to stop unfair charging of Indian workers overseas, who often end up paying hefty social security payments without getting any attendant benefits. It is making aggressive attempts to sign bilateral agreements with nine developed nations to stop pooling of money by Indian expatriates into various social security schemes in these countries.

“Active negotiations are underway with nine countries, which include Australia, Canada, Denmark, South Korea, Sweden, Hungary, Czech Republic and Norway. We expect to sign the agreements during the next calendar year,” a senior official of the Employees’ Provident Fund Organisation (EPFO) told Hindustan Times.

EPFO is the nodal agency in India, which would issue “certificate of coverage” (for countries with which India has an agreement) stating that an Indian employee is already contributing to the social security schemes in India. The ‘certificate of coverage’ would exempt an Indian employee for contributing to the social security schemes of host countries. The EPFO has already issued around 260 such certificates for Belgium.

India has already inked agreements with Germany, Belgium, France, Switzerland, Luxembourg and Netherlands.

Expatriate Indians working in foreign countries contribute from 3 to 30 per cent of their salaries to the social security schemes. However, thanks to the stringent terms and conditions the Indian professionals cannot receive the benefits. “India loses around $48 billion (Rs 2,24,078 crore) per annum to the social schemes of different countries as that amount would have otherwise got remitted to India,” the official said.

Interestingly, US that mops up around $1.5 billion (Rs 7,000 crore) per annum from Indian expatriates contribution to its social security schemes has not been very keen on signing such agreement. Also most of the Indian expatriates lose on deriving benefits under the scheme as the social security laws of US want an employee to have worked for at least 40 continuous quarters (10 years) in the United States to avail the benefits. Incidentally the H1B visa has a maximum time limit of 6 years.