Dashing India’s hopes of finalising a social security agreement with the US under the current Obama administration, Washington has said that the pact cannot be signed till more Indians are brought under compulsory social security cover.

“New Delhi was told at the recent Trade Policy Forum (TPF) meeting that it did not qualify for a totalisation pact with Washington as it did not meet the legislative requirement of minimum social security net for half its population. It said that concessions could not be made on that account,” a government official told BusinessLine .

The categorical rejection means that India will not be able to enter into a totalisation pact with the US, at least till a new government is elected which may be more flexible on the matter.

“US officials said that the country was interested in keeping talks alive on the issue to discuss new social security schemes that India may launch that could make it eligible for the agreement. However, it doesn’t mean much because social security schemes that are mandatory are not easy to launch for a developing country,” the official said.

The TPF was chaired by Commerce Minister Nirmala Sitharaman and US Trade Representative Michael Froman.

The US rejected India’s contention that it met the mandatory requirement of covering 50 per cent population under social security by taking into account new schemes such as the Atal Pension Yojana and Pradhan Mantri Suraksha Yojana. It argued that such schemes would not qualify as these were non-mandatory.

It also did not agree with New Delhi on its argument that since it has concluded successful social security pacts with a number of countries such as Canada, France and Germany, which also have similar pacts with the US, there was no reason why one can’t be inked between the two.

According to India’s estimates, a social security pact could save its IT companies in the US up to $4 billion of annual social security contributions that cannot be used by the Indian employees because of their short stay. “This has come as a big disappointment for India as Prime Minister Narendra Modi, too, had lobbied for the agreement during US President Barack Obama’s visit earlier this year. Expectations were high when the US agreed to set up a negotiating forum on totalisation in August this year after not formally talking on the matter for several years,” the official added.

While the negotiating forum that was set up in August to discuss a possible totalisation agreement between India and the US will stay active, it is unlikely to produce any tangible results.

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