India is opening up a chunk of its protected government procurement market to foreign firms, including the US two government sources said, in a shift that could extend to other trading partners after it was offered to the UK under a trade deal this month.
The government is likely to allow US firms to bid for contracts worth over $50 billion, mainly from federal entities, as it negotiates a trade deal with Washington, the sources said.
Total public procurement — including by federal, state and local governments and state-run firms — is worth an estimated $700 billion-$750 billion per year, according to government estimates. Most is reserved for domestic firms, with 25 per cent set aside for small businesses, although sectors like railways and defence can buy from foreign suppliers when domestic options are unavailable.
Earlier this month, India and the UK agreed on a free trade pact that gives British firms access to federal government contracts in select sectors — covering goods, services and construction — on a reciprocal basis.
“In a policy shift, India has agreed to open its public procurement contracts gradually to trading partners, including the US, in a phased and reciprocal manner,” said one of the officials, with the knowledge of the matter.
Only a portion of the government’s procurement contracts — mainly linked to federal projects worth around $50-60 billion — will be opened to foreign firms, while state and local government purchases will be excluded, the official said.
“Following the UK pact, India is ready to open a part of its public procurement market to the US as well,” said a second official.
The commerce ministry did not respond to requests for comment on the US proposal or extending the plan to other nations.
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