India to allow US firms to bid for govt contracts worth Rs. 4,29,150 crore (US$ 50 billion) in wider scope for foreign firms: Report

India is set to allow US firms to bid for government contracts worth over Rs. 4,29,150 crore (US$ 50 billion), primarily from federal entities, as it negotiates a trade deal with Washington. This move follows a similar agreement with the UK earlier this month, which grants British firms access to federal government contracts in select sectors, including goods, services, and construction, on a reciprocal basis. India's total public procurement market, including federal, state, and local governments and state-run firms, is estimated at Rs. 60,08,100- 64,37,250 crore (US$ 700-750 billion) annually, with most contracts reserved for domestic firms. However, sectors like railways and defense can source from foreign suppliers when domestic options are unavailable. The decision to open up a portion of its procurement market to foreign firms is a policy shift for India, which has historically protected its domestic businesses.

The commerce ministry has clarified that UK firms will have limited access to bid for contracts of non-sensitive federal entities, excluding state and local government procurement. UK-based suppliers can bid for Indian tenders above Rs. 199.6 crore (US$ 23.26 million). At the same time, the UK will offer non-discriminatory access to Indian suppliers under its public procurement system. Secretary General of the Federation of Indian Micro, Small, and Medium Enterprises (FiSME), Mr. Anil Bhardwaj, noted that a quarter of the orders will still be reserved for small industries. This reciprocal arrangement provides opportunities for foreign firms and opens up overseas markets for Indian businesses.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.