India, Germany sign social security pact

India and Germany signed an agreement here on Wednesday to exempt nationals of either country from making social security contribution. The exemption will be made to people on short term contracts for a period of four years that can be extended to one more year. The current Agreement covers only the detached workers. Bilateral discussions for negotiating a full fledged Social Security Agreement are currently underway, and are expected to be completed by next year. The agreement was signed by K Mohandas, Secretary, Ministry of Overseas Indian Affairs and Franz-Josef Lersch-Mense, Secretary of State, Ministry of Labour and Social Affairs, Germany. Under the new agreement, no social security contribution would need to be paid under the German law for short term contract up to four years by the detached workers provided they continue to make social security payment in India Vayalar Ravi, Minister of Overseas Indian Affairs, said on the occasion, ?The agreement will help Indian investors and professionals in Germany and enhance competitiveness among them.? Lersch-Mense said the agreement would now go before the German parliament for its consent. A similar legislative exercise will be undertaken by the Indian parliament also before the provisions of the agreement are put into effect. So far, Indian professionals who were sent to Germany on short term contract had to pay double payment; both in India and Germany. But now they would need to pay contribution only in India. The exemption would make Indian companies more competitive as the employers of the companies would not need to pay in respect of their employees; this will reduce their substantial cost. With this agreement, nearly 68,500 Indian professionals and self employed persons working in Germany are likely to be benefited. India recently signed a social security agreement with France, Belgium. Similar agreements are slated to be signed soon with Netherlands and the Czech Republic besides negotiations are taking place with Spain, Portugal, Switzerland, Norway and Sweden.