India is preparing to open a significant portion of its protected government procurement market to foreign companies, including those from the United States, according to two senior government officials. This potential shift follows a similar offer recently extended to the United Kingdom under a bilateral trade agreement and could set the stage for broader engagement with other trading partners.

As part of ongoing trade negotiations with Washington, the Indian government is expected to allow U.S. firms to bid on federal procurement contracts valued at over $50 billion, the officials said. This move marks a significant policy change in a market that has largely been reserved for domestic suppliers.

India’s total public procurement—spanning federal, state, and local governments, as well as state-owned enterprises—is estimated at $700–750 billion annually. Traditionally, most of these contracts are reserved for domestic companies, with 25% specifically allocated to small enterprises. However, sectors like defence and railways are permitted to procure from international suppliers when local options are insufficient.

Earlier this month, India and the UK reached a free trade agreement granting British firms reciprocal access to select federal government tenders, covering goods, services, and construction.

“In a notable policy shift, India has decided to gradually and reciprocally open its public procurement contracts to trade partners, including the U.S.,” one official with direct knowledge of the matter stated.

The opening will be limited to a subset of contracts—primarily federal projects valued between $50–60 billion. State and local government tenders will remain off-limits to foreign bidders, the official clarified.

Following the UK deal, India is prepared to extend similar access to U.S. companies, a second official confirmed. Both sources requested anonymity, as the negotiations remain confidential.

The Ministry of Commerce has not issued any public comment regarding the potential U.S. agreement or whether similar arrangements could be extended to additional countries.

India has long resisted signing the World Trade Organization’s Government Procurement Agreement (GPA), arguing the need to protect its small and medium enterprises. In its March report on foreign trade barriers, the U.S. Trade Representative criticized India’s restrictive procurement practices, citing evolving regulations and limited access for American companies.

Trade Minister Piyush Goyal visited Washington this week to advance bilateral trade discussions. Both nations are aiming to conclude an interim agreement by early July. The negotiations are taking place during a 90-day tariff freeze announced by U.S. President Donald Trump on April 9, which includes a temporary halt on proposed 26% import tariffs from India and other key trading partners.

In a statement, the commerce ministry clarified that under the UK deal, British firms would be permitted to bid only on contracts from non-sensitive federal entities, with state and local contracts excluded. UK-based bidders will be eligible for tenders exceeding ₹2 billion, while the UK will offer Indian firms equivalent access under its own procurement system.

To address concerns from domestic businesses, the Indian government has assured that 25% of all public procurement will continue to be reserved for small enterprises. Anil Bhardwaj, Secretary General of the Federation of Indian Micro, Small and Medium Enterprises, welcomed the development: “Opening procurement to foreign firms on a reciprocal basis provides Indian companies with valuable opportunities to access overseas markets.”

Bangladesh has withdrawn from a $21 million agreement with Kolkata-based state-run firm Garden Reach Shipbuilders and Engineers Ltd (GRSE) for the construction of a modern ocean-going tugboat. The cancellation follows a period of escalating tensions between Dhaka and New Delhi, particularly after Prime Minister Sheikh Hasina was removed from office last year.

The decision comes shortly after India imposed restrictions on ready-made garment imports from Bangladesh, limiting them to just two ports: Kolkata and Nhava Sheva.

GRSE had signed the tugboat contract with the Bangladesh Navy in July 2024—just a month before Hasina’s ouster. On Wednesday, the company formally notified the National Stock Exchange of India about the termination.

“In compliance with Regulation 30 and other relevant provisions of the SEBI Listing Regulations, we hereby inform that the Government of the People’s Republic of Bangladesh has cancelled the order,” the GRSE said in its exchange filing.

The now-cancelled deal was a significant step in a broader effort to bolster India-Bangladesh defence cooperation, agreed upon during Hasina’s June 2024 visit to India. It was the first major project under India’s $500 million line of credit for defence-related purchases by Bangladesh.

In recent weeks, New Delhi has further strained trade ties by banning imports of Bangladeshi consumer goods through 11 land ports in India’s northeast—a move expected to severely affect Bangladesh’s $700 million annual garment exports to India, 93% of which transit through land routes.

Additionally, India ended a transit arrangement in April that allowed Bangladeshi cargo to be shipped to third countries via Indian airports and seaports. In retaliation, Bangladesh stopped allowing yarn imports from India via land ports on April 13.

Despite these tensions, Bangladesh remained India’s top trading partner in South Asia during FY24. India was Bangladesh’s second-largest export destination, accounting for 12% of its total exports, while Indian exports to Bangladesh reached $11.06 billion. Imports from Bangladesh stood at $1.8 billion in the same period.

Relations have been further strained by comments from interim Prime Minister Muhammad Yunus, who suggested leveraging India’s northeastern states’ geographical dependence on Bangladeshi ports to attract Chinese investment. He emphasized the strategic advantage of Bangladesh’s coastline for regional trade, particularly as the northeast shares a 1,600-km border with his country.

On Wednesday, Pakistan agreed to enhance trade and investment cooperation with China, according to a report by Reuters. The move follows heightened tensions with India, stemming from a deadly conflict that recently erupted between the two nations.

Earlier, on May 10, India and Pakistan reached a ceasefire after four days of intense fighting — the most severe escalation in three decades. The violence was triggered by an April 22 attack in Indian-administered Kashmir, which resulted in the deaths of 26 people.

In a joint development, Beijing and Islamabad committed to strengthening bilateral cooperation across multiple domains, including security and counterterrorism. They also agreed to accelerate progress on an upgraded version of the China-Pakistan Economic Corridor (CPEC), a flagship Belt and Road Initiative project. India has previously objected to the project’s route through Jammu and Kashmir, citing concerns over territorial sovereignty.

The original phase of CPEC spans approximately 3,000 kilometers, linking China’s Xinjiang region with the port city of Gwadar in southern Pakistan. China has pledged $65 billion toward infrastructure development along this corridor.

On Tuesday, Pakistan’s Foreign Minister Ishaq Dar met with Chinese counterpart Wang Yi in Beijing. During the meeting, Wang expressed China’s support for efforts by both India and Pakistan to resolve disputes through dialogue and achieve a lasting ceasefire. He reaffirmed China’s commitment to assisting Pakistan in protecting its sovereignty and territorial integrity, as per a statement from the Chinese Foreign Ministry.

In addition to sustaining close diplomatic engagement, the two countries agreed to broaden cooperation in key sectors such as trade, agriculture, industrial development, and investment, according to Pakistan’s Foreign Ministry.