UK Firms Can Bid on Govt Tenders Over Rs 200 Cr Post-FTA, Says Piyush Goyal
New Delhi [India], May 8 (ANI): Sharing more details on the India-UK FTA, Union Commerce and Industry Minister Piyush Goyal said that UK-based suppliers will be eligible to bid for government tenders only for orders of more than Rs 200 crore.
The Union Minister further added that market access to the UK under FTA will be limited to the Non-sensitive central level entities only, and access for sub-central (state / local government) level entities is excluded.
He said for the first time, the UK agreed to take a binding commitment to provide non-discriminatory treatment to our suppliers under UK's Social Value regime in their public procurement system.
India's government procurement market is among the largest in the world, estimated at nearly USD 600 billion annually, which is around 15 per cent of the country's GDP.
Global Trade Research Initiative (GTRI) in a report suggested that India should approach the implementation of the Government Procurement (GP) chapter in the recently concluded India-UK Free Trade Agreement (FTA) with extreme caution.
It highlights potential risks to the domestic industry, especially Micro, Small and Medium Enterprises (MSMEs), due to increased foreign competition.
India is now facing increasing pressure from its trading partners, particularly the UK and the European Union, to open up its GP market.
This demand has translated into a significant policy shift in the India-UK FTA, which includes a detailed GP chapter, the GTRI stated.
As part of the FTA agreement, India has consented to permit UK companies to take part in central government bidding processes. These businesses can now qualify as 'Class 2 Local Suppliers' within the Make in India initiative even if their products contain only 20 percent UK-made components. Earlier, this classification was exclusively for Indian entities having greater local content levels.
The GTRI report cautioned that granting UK firms nearly equal access to government contracts might force Indian MSMEs out of the market. These smaller enterprises depend significantly on safeguarded government procurement for their sustenance.
Furthermore, this change might undermine one of India’s remaining instruments for promoting local manufacturing, fostering innovation, and boosting employment, cautions GTRI.
GTRI suggests that India ought to keep strategic areas like defense, rail transport, and critical infrastructure off-limits from foreign investment to protect national interests and foster domestic businesses.
Government procurement extends beyond serving as a means for public expenditure; it also acts as a strategic lever to bolster domestic production, enhance the capacities of micro, small, and medium enterprises (MSMEs), and back nationwide programs such as 'Make in India' and 'Atmanirbhar Bharat'.
In contrast to several advanced nations, India hasn’t signed onto the World Trade Organization’s Government Procurement Agreement (GPA). This allows them to keep their options open for supporting local businesses. According to current regulations, at least 25 percent of governmental procurement activities in India must be allocated to Micro, Small, and Medium Enterprises (MSMEs). (ANI)
