Sir Keir Starmer hailed the UK-India free trade deal as a “huge win” but his Government was facing criticism over “two-tier taxes” for seconded workers.
At Prime Minister’s Questions, he strongly defended the agreement.
But Reform UK leader Nigel Farage claimed the deal would mean British workers are “sold out to the highest degree”.
The dispute is over a “Double Contribution Convention” which will mean Indian business people and other professionals seconded to the UK will not pay National Insurance contributions into both countries’ social security system for three years, and vice versa for British staff transferred to India.
Such a system already exists between Britain and the US, Canada, the EU, Japan, and dozens more countries.
But Mr Farage, just days after his May 1 election successes, claimed British workers were being let down by the deal struck by Sir Keir Starmer.
He said: “He has undercut, sidelined and betrayed them, and chosen to prioritise Indian arrivals instead.
“As ordinary Brits face tax rises and UK employers are being asked to fork out more in National Insurance contributions, Indian workers are getting a free pass.”
But Business Secretary Jonathan Reynolds hit back, saying: “This is absolute nonsense from Nigel Farage.
“No-one is being undercut as part of this...that is completely false as a way to present it.
“And I say to people like Nigel Farage, ‘you were in favour of Brexit and now you don’t want to do trade deals with India, who do you want to do a trade deal with?’
“If people like Nigel Farage cannot support the biggest trade deal since Brexit, who does he want to do trade with if it’s not the Europeans, the Chinese, or the Indians?”
Mr Reynolds said the exemption was needed to get a “balanced” deal over the line, with tariffs being slashed, which he claimed benefited the UK by £900 million a year eventually, compared to £200 million for India.
Tory leader Kemi Badenoch said she had refused to agree a similar trade-off when she was Business Secretary, because the deal contains “two-tier taxes” which will cost the UK “hundreds of millions”.
But Mr Reynolds added: “Kemi did not have this deal, she did not have the goods part signed off, services signed off.”
He claimed the Tories response was partly due to “embarrassment” at having long-promised a free trade deal with India which they had not delivered.
The Department for Business and Trade stressed that the agreement would “lock in” reductions on 90% of tariff lines, with 85% of these becoming “fully tariff-free” within a decade.
On specific items, the DBT outlined that:
* Car tariffs will fall from over 100% to 10% under a quota.
* Other goods with reduced tariffs include cosmetics, aerospace, lamb, medical devices, salmon, electrical machinery, soft drinks, chocolate, and biscuits.
The UK government claimed the agreement would add £4.8 billion to UK economy and £2.2 billion in wages a year by 2040.
