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.”
