India plans to allow foreign companies, including those from the United States, to participate in parts of its protected government procurement market, according to two government sources. This follows India’s recent trade deal with the United Kingdom, which opened some government contracts to British firms.
U.S. Companies May Bid for Federal Contracts Worth Over $50 Billion
The U.S. government could soon permit American companies to compete for Indian federal government contracts valued at more than $50 billion. The procurement mainly covers federal projects and is part of ongoing trade negotiations between India and the U.S., the sources said.
Overview of India’s Public Procurement Market
India’s total public procurement market—including federal, state, local governments, and state-owned enterprises—is estimated at around $700 billion to $750 billion annually. Most contracts are reserved for domestic companies, with 25% specifically set aside for small businesses. However, certain sectors like railways and defense can source from foreign suppliers if no suitable domestic alternatives exist.
Recent UK-India Trade Agreement Opens Federal Contracts to British Firms
Earlier this month, India signed a free trade agreement with the United Kingdom. The deal grants British companies reciprocal access to some Indian federal government contracts for goods, services, and construction projects. However, this access excludes sensitive sectors and state or local government procurement.
Gradual and Reciprocal Opening of Government Procurement
An official close to the talks said, “India has shifted its policy to gradually open public procurement contracts to trading partners, including the United States, in a phased and reciprocal manner.” Only certain federal contracts worth around $50 billion to $60 billion will be open to foreign bidders; state and local contracts remain off-limits for now.
Another source confirmed, “India is ready to open parts of its public procurement market to the United States, following the precedent set with the United Kingdom.”
Both officials requested anonymity, as the negotiations are still confidential.
India’s Stance on Government Procurement in Global Trade
India has traditionally resisted joining the World Trade Organization’s Agreement on Government Procurement, citing the need to protect its small businesses.
The U.S. Trade Representative’s March report on foreign trade barriers highlighted that India’s procurement policies create challenges for American companies due to “changing rules and limited opportunities.”
Upcoming Trade Talks and Interim Agreement
Indian Trade Minister Piyush Goyal is visiting Washington this week to advance negotiations. Officials expect both countries to sign an interim trade agreement by early July.
The push for a deal follows U.S. President Donald Trump’s announcement on April 9 of a moratorium on tariff hikes for major trading partners, including India. Currently, India faces a 26% tariff on some imports to the U.S.
Details on UK Companies’ Access and Small Business Protections
The British business ministry confirmed that British firms can bid only on contracts from non-sensitive federal projects, excluding state and local purchases. British suppliers may compete for Indian tenders exceeding 200 crore rupees (about $23.26 million). In return, Britain will offer non-discriminatory access to Indian suppliers under its procurement system.
Anil Bhardwaj, secretary general of the Federation of Indian Micro, Small and Medium Enterprises (FISME), said the government has assured that 25% of government orders will remain reserved for small businesses.
He added, “Opening procurement to foreign companies on a reciprocal basis also offers new opportunities for Indian companies to access overseas markets.”
