NEW DELHI: India is preparing to open its protected government procurement market to foreign firms, including those from the United States, a Reuters report quoted two senior government officials as saying. According to the report, India is likely to allow US companies to bid for contracts valued at over $50 billion, primarily involving federal entities.
For context, India’s total public procurement market, which includes purchases by central, state and local governments, as well as PSUs, is estimated at $700 billion to $750 billion annually. Currently, most contracts are reserved for domestic firms, with 25% earmarked for small businesses, the report stated. However, sectors such as defence and railways already permit foreign procurement when local alternatives are unavailable.
The move follows the recent trade agreement between India and the United Kingdom earlier this month that allowed British companies access to federal government contracts in select sectors on a reciprocal basis. Officials now say similar access could soon be granted to US firms as part of an ongoing trade negotiation between the countries.
The report further stated that the liberalisation will be limited to central government contracts worth $50–$60 billion for the US for now. Purchases made by state and local authorities will remain restricted to domestic bidders, the sources told Reuters.
Notably, India has been long resisting to join the World Trade Organisation’s Government Procurement Agreement, citing the need to protect its micro, small and medium enterprises (MSMEs). Commerce and Industry Minister Piyush Goyal visited Washington this week to advance talks. Officials on both sides are hopeful of finalising an interim agreement by early July.
The UK trade deal now serves as a template. UK firms may bid for Indian tenders above Rs 200 crore related to non-sensitive federal entities, while Indian companies will receive similar access under Britain’s procurement framework.
Source: The Financial Express
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