India has no assurance from the US yet on whether the country is willing to start negotiations on a bilateral totalisation (social security) pact — a move that could save Indian IT companies up to $4 billion annually.

“US officials have informed us that they are examining whether it was legally tenable to enter into a social security agreement with India because of the differences in the social security structures of the two countries and would revert with their views,” a Commerce Ministry official told BusinessLine .

New Delhi wants that in addition to working on a comprehensive treaty, Washington should exempt Indians working on H1B visas from contributing to social security as they are not eligible for a refund.

According to US laws, social security refund can be claimed by foreign workers after 10 years of service whereas the H1B visas are given for only six years.

“We are waiting for a communication from them (the US). If it doesn’t come, then our senior officials and Ministers will take it up in the meetings they have with their counterparts over the next few months,” the official said. Prime Minister Narendra Modi had taken up the matter with US President Barack Obama during his recent visit.

India was hopeful that it would get the US to commit to start negotiations on a totalisation pact, but it did not happen.

The matter was also strongly taken up by Indian CEOs in the US-India CEO roundtable attended by both Modi and Obama where they asked for a time-bound commitment on starting negotiations.

“The US is within its rights to examine the legal aspects related to a totalisation pact with India, but we have a valid point when we say that money belonging to our companies, which adds up to about $4 billion a year, should not be unfairly taken away,” the official said.

In a note to all Ministries and Departments concerned, the Ministry of External Affairs (MEA), too, has asked officials to take forward with their US counterparts the issues highlighted in the CEO forum which included totalisation.

India rejects claim The US has been avoiding a social security agreement with India for a decade on the ground that India doesn’t have social security cover for old age, death and disability for most of its workers.

India argues that it has a large number of social security schemes, such as the Employees’ Provident Fund, the Rashtriya Swasthya Bima Yojana, various old age pension plans and the Mahatma Gandhi National Rural Employment Guarantee Scheme.

Interestingly, India has signed social security pacts with countries like Canada, France and Germany which also have similar pacts with the US.

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