India insists on such a pact because, under U.S. law, foreign workers can claim social security reimbursements after 10 years of service, while H-1B visas are only issued for up to six years. As a result, social security contributions cannot be used by workers at all. According to Richa Mohanty Rao, partner of the law firm Cyril Amarand Mangaldas, SSAs are akin to double taxation agreements in which workers in the signatory states are not subject to the social security laws of the host state when they contribute in their country of origin. The result is a more equitable treatment of employees and employers on the basis of reciprocity, she added. The Indian industry in the United States pays about $1 billion for Social Security, which can only be redeemed after 10 years. With a temporary highly qualified visa holder`s lifespan of three to six years, most workers are unable to obtain benefits, the Confederation of Indian Industry (CII) and the United States India Business Council (USIBC) said Tuesday in a new report. India supports the proposed discussions with the US Social Security Administration (SSA) on the long-standing totalization agreement, believing that the two countries` systems are now more compatible than before. The deal could help Indian companies in the United States save up to $4 billion in social security contributions a year. A totalization agreement, commonly known as the Social Security Agreement, exempts foreign workers with non-permanent visas from social security contributions in the country of employment, where they are not entitled to reimbursement. Prime Minister Narendra Modi spoke of the need for the totalization agreement, while Foreign Minister Harsh Vardhan Shringla said that the two issues relating to the H-1B visa, which has a direct impact on the IT sector, and totalization agreements with the US authorities were addressed. „The United States believes that due to the incompatibility of the two social security systems, the totalization agreement may not be plausible in the current context,“ says the joint CII-USIBC report, which recommends an analysis of the feasibility and prospects of an agreement. Despite years of negotiations, the United States has not signed the Totalization Agreement, also known as the Social Security Agreement (SSA) with India, to protect the rights of IT and other service workers who share their professional careers between India and the United States.

This time, however, India believes that its chances of convincing the United States of compatibility are greater, as it has introduced several new social security systems for the elderly and those in the disorganized sector in recent years. According to industry estimates, Indian companies, mainly in the information technology sector, lose up to $4 billion a year in U.S. Social Security, which is never reimbursed. With regard to H-1B visas, Shringla said that Indian authorities had addressed the issue during Tuesday`s dialogue with their American counterparts and stressed that Indian experts are making a significant contribution to the high-tech sector in the United States. „The United States has formalized totalization pacts with countries like Canada and Australia. India also hopes to be on this list,“ the official added. Some believe, however, that the United States may not be willing to consider a pact until India has a universal social security system in place. „It is possible that the US SSA will insist on a universal social security system covering the entire population before agreeing to a totalization pact,“ said a Delhi trade expert. „The issue of totalization has also arisen. There was a feeling that Indian pros who spend less than eight years and contribute to social security…

really need to get that money back,“ Shringla said Tuesday.