UK Firms Can Bid on Govt Tenders Over Rs 200 Cr Post-FTA, Says Piyush Goyal

In New Delhi [India], on May 8 (ANI), the Union Commerce and Industry Minister provided additional information regarding the Free Trade Agreement between India and the UK.
Piyush Goyal
mentioned that UK-based suppliers will qualify to bid for government contracts only if the order exceeds Rs 200 crore.

The Union Minister also mentioned that market access to the UK through the Free Trade Agreement will be restricted to non-sensitive central-level entities exclusively, with sub-central (state or local government) level entities not being granted access.

For the first time, he stated that the UK consented to commit itself legally to ensuring nondiscriminatory treatment of our suppliers within their social value framework as part of their public purchasing processes.

The government procurement market in India ranks as one of the biggest globally, valued at approximately USD 600 billion each year, constituting about 15 percent of the nation’s gross domestic product.

The Global Trade Research Initiative (GTRI) has stated in a report that India ought to exercise great care when implementing the Government Procurement section within the newly established India-UK Free Trade Agreement (FTA).

This points out possible threats to the local industry, particularly Micro, Small, and Medium-sized Enterprises (MSMEs), because of heightened foreign rivalry.

India is currently under growing pressure from its trade allies, notably the UK and the European Union, to liberalize its pharmaceuticals market.

The requirement has led to considerable changes in the India-UK Free Trade Agreement, including an extensive General Principles chapter, as mentioned by the GTRI.

As part of the Free Trade Agreement (FTA), India has consented to permit UK companies to take part in central government bidding processes. These firms can now qualify as ‘Class 2 Local Suppliers’ within the Make in India initiative even when their products contain only 20 percent UK-origin materials. Previously, this classification was exclusive to Indian entities having greater local content involvement.

The GTRI report cautioned that granting UK firms nearly equal access to government contracts might displace Indian MSMEs from the market. These smaller enterprises significantly depend on safeguarded government procurement for their sustenance.

Furthermore, this step might undermine one of India’s remaining instruments for promoting local manufacturing, technological advancement, and job creation, cautions GTRI.

The GTRI suggests that India ought to keep critical areas such as defense, rail transport, and essential infrastructure out of reach from foreign entities. This precaution aims at protecting national interests and fostering the growth of domestic industries.

Beyond being a tool for public spending, government procurement serves as a strategic instrument to promote local manufacturing, strengthen MSME capabilities, and support national initiatives like ‘Make in India’ and ‘Atmanirbhar Bharat’.

In contrast to several advanced nations, India remains outside the World Trade Organization’s Government Procurement Agreement (GPA). This allows India to maintain flexibility in favoring local businesses. According to current regulations, at least 25 percent of governmental procurement activities in India are set aside for Micro, Small, and Medium Enterprises (MSMEs). (ANI)