India plans to allow US and other foreign companies to bid for select government contracts. | Image by Grok |
India is planning to let companies from the United States and other countries bid for some of its government contracts. This is a major shift from its past rules, where most government buying was only open to Indian companies, as reported by Reuters.
USD 50 Billion Market Opening for US Companies
Two government officials said India is likely to open contracts worth around USD 50–USD 60 billion to US firms. These contracts mostly belong to the federal government. State and local-level contracts will not be part of this plan for now.
Trade Talks Driving the Change
This move comes as India negotiates a trade deal with the US. Earlier this month, India signed a similar agreement with the UK, allowing British firms to bid for some Indian federal contracts. The deals are being made on a “give and take” basis – meaning both sides allow each other’s companies to participate in certain government bids.
India’s Government Spending is Huge
India’s total public procurement – which includes buying by the central, state, and local governments, as well as state-owned firms – is estimated to be worth USD 700–USD 750 billion every year. So far, most of it is reserved for Indian companies. Also, 25% of contracts are saved for small Indian businesses.
UK Deal Sets the Example
As part of the India-UK trade pact, UK firms can now bid on tenders above Rs 2 billion (about USD 23.26 million) from non-sensitive Indian government departments. In return, Indian companies will get equal chances in the UK’s procurement market.
Small Businesses to Stay Protected
India has assured that small and medium businesses will continue to get at least 25% of government contracts. Anil Bhardwaj from FISME (an industry body for small businesses) said this change can help Indian businesses find more chances overseas as well.
Next Steps with the US
India’s Trade Minister Piyush Goyal was in Washington this week to push for a deal. Both countries aim to finish an agreement by early July. The US had earlier paused new tariffs on India and other countries, giving India a short time to reach a deal.
Why India Was Hesitant Before
India has been careful about joining global rules like the WTO’s Government Procurement Agreement, mostly to protect its small businesses. But now, with new trade goals, India is slowly opening parts of its market to trusted partners.
