Government procurement: Govt defends leeway for UK, says $112-billion market opened for India – Economy News

The public procurement provisions of the India-UK Comprehensive Economic and Trade Agreement (CETA) will open up $ 122 billion worth of market for Indian companies without any discrimination, commerce secretary Sunil Barthwal said Friday.

“For the first time the UK has agreed to take a binding commitment to provide non-discriminatory treatment for Indian suppliers under the UK’s social value regime,” he said. India’s commitment under the agreement on public procurement would open up $ 114 billion market for the suppliers in the UK.

MSMEs

The UK’s social value regime mandates that public sector bodies consider the wider social, economic, and environmental impact of their procurement activities beyond just financial cost. This means they must evaluate how a supplier’s work will improve the well-being of communities and the environment, not just whether it is the cheapest option.

“It is the second trade agreement that India has signed that has a chapter on government procurement. The first was the one signed with the United Arab Emirates (UAE) in 2022 but it has many restrictions. In comparison, under the India-UK CETA, both the parties have offered meaningful market access to each other,” another official said.

The statement comes as some experts have criticised the additional leeway given to the UK businesses in this respect, as compared to the UAE firms under the free trade pact with the West Asian kingdom.

The public procurement provisions of the CETA also protect India’s rules that bar foreign suppliers from contracts below a certain value. India’s threshold for goods and services procurement under the agreement has been pegged at Rs 5.5 crore while for the UK this limit is Rs 1.6 crore. For procurement related to construction services both sides have agreed to a threshold of Rs 60 crore.

The market access under India-UAE Comprehensive Economic Partnership Agreement (CEPA) is limited to a few central government entities with higher thresholds around Rs 250 crores across goods, services and construction services. Under the CEPA, UAE has also retained its discriminatory policies like local value addition and price preference green products and does not provide any guarantees for Indian suppliers.

Under the CETA with the UK, India has also taken a complete carve out of its preferential procurement policy for Micro Small and Medium Enterprises (MSMEs). While the UK suppliers are eligible to participate as “Class-II local suppliers” if at least 20% of their product or service is from the UK. Indian suppliers will continue to receive preferential treatment as “Class-I local suppliers” if their goods or services have more than 50% local content from India.

Indian firms to gain access to key UK entities

India’s commitments under the agreement are limited to central government ministries and departments and their subordinate offices. Central public sector enterprises and state and local government procurement are out of the agreement.

Indian suppliers will have guaranteed access to the UK procurements being conducted at the central level of government and some at the utilities level. They will be able to participate in procurements by major government departments such as the Cabinet Office, Department for Business and Trade, National Highways, NHS Foundation Trusts (Department of Health and Social Care), Foreign, Commonwealth and Development Office, Department for Education, among others.

In addition, Indian suppliers can participate in government procurement conducted by entities such as Belfast Metropolitan College, Northern Regional College, North West Regional College, which are not offered to all trading partners.

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