India may soon allow US, foreign companies to bid for govt contracts

India is opening up a chunk of its protected government procurement market to foreign firms, including the US, 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.

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.

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.

The commerce ministry did not respond to requests for comment on the US 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 US Trade Representative said India's restrictive procurement policies pose challenges for US firms due to "changing rules and limited opportunities."

The commerce ministry did not respond to requests for comment on the US 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 US Trade Representative said India's restrictive procurement policies pose challenges for US firms due to "changing rules and limited opportunities."