Live EventsYou Might Also Like: Interim trade deal with US likely by July 8; India for full exemption from 26% additional tariffYou Might Also Like: India, EU looking for early harvest trade agreement by July: Official(You can now subscribe to our(You can now subscribe to our Economic Times WhatsApp channelIndia is opening up a chunk of its protected government procurement market to foreign firms, including the U.S, two government sources said, in a shift that could extend to other trading partners after it was offered to the UK under a trade deal this month.The government is likely to allow U.S. firms to bid for contracts worth over $50 billion, mainly from federal entities, as it negotiates a trade deal with Washington, the sources said.Total public procurement - including by federal, state and local governments and state-run firms - is worth an estimated $700 billion-$750 billion per year, according to government estimates. Most is reserved for domestic firms, with 25% set aside for small businesses, although sectors like railways and defence can buy from foreign suppliers when domestic options are unavailable.Earlier this month, India and the UK agreed on a free trade pact that gives British firms access to federal government contracts in select sectors - covering goods, services and construction - on a reciprocal basis. "In a policy shift, India has agreed to open its public procurement contracts gradually to trading partners including the U.S. in a phased manner and reciprocal manner," said one of the officials, with the knowledge of the matter.Only a portion of the government's procurement contracts - mainly linked to federal projects worth around $50-$60 billion - will be opened to foreign firms, while state and local government purchases will be excluded, the official said. "Following the UK pact, India is ready to open a part of its public procurement market to the U.S. as well," said a second official.Both sources requested anonymity, as details of the ongoing talks have not been made public.The commerce ministry did not respond to requests for comment on the U.S. proposal or extending the plan to other nations.India has long resisted joining the World Trade Organisation's Government Procurement Agreement, citing the need to protect small businesses.In its March report on foreign trade barriers, the U.S. Trade Representative said India's restrictive procurement policies pose challenges for U.S. firms due to "changing rules and limited opportunities. "Opening procurement to foreign firms on a reciprocal basis offers an opportunity for Indian businesses in overseas markets as well," he said.
