Heera Singh Uppal said he pretended to go along with the plan in order to get a large up-front payment from Wolverhampton businessman Gurpreet Singh who had told him he wanted to marry someone else.
Mr Uppal, 27, claimed that Singh, his employer at the time, told him to pose as a parcel delivery man so that his wife Amandeep Kaur would answer the door of their home on Rookery Lane, Penn.
He was then to ask for a glass of water and when her back was turned to stab her to death and make it look like the scene of a robbery, Birmingham Crown Court heard.
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Singh, aged 43, is accused of murdering his second wife Sarbjit Kaur in February last year and of soliciting the murder of his first wife Amandeep in 2013. He denies both charges.
Mr Uppal, who travelled from India to give evidence, said his boss called at his digs in Upper Villiers Street, saying he had “something important” to discuss.
Sitting in Singh’s black Audi outside the address, he said the businessman took £2,000 out of the glove compartment and told him: “I want to have my wife done. Will you be able to do it?”
The witness said he was shocked but agreed because he wanted to buy a car.
Singh said he would pay £10,000 after he had carried out the murder with a further £10,000 payment after he returned to India.
Mr Uppal said he took the advance payment and spent it on an iPhone and clothes.
Over the next few days, Singh put pressure on him to carry out the killing but he said he had no intention of ever doing so, the court heard.
“My thought was to get the maximum amount of money I could get out of him and go back to India,” he told the court.
After returning home, he learned that Amandeep Kaur had died on holiday in India and tried to blackmail Singh.
He travelled to the defendant’s village in the Punjab and told a servant of Singh, now back in the UK, that he was there.
He also rang Singh directly, telling him: “I’m going to the local police station here and will tell them everything you have done.”
He told the jury that the defendant sent him 46,000 Rupees, about £550, and told him to keep his mouth shut.
The trial continues.