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UK companies are now eligible to bid for a vast array of government contracts in India, following a landmark free trade agreement signed last month. This deal, a significant shift in India’s procurement policy, allows British businesses to compete for approximately £38 billion worth of high-value tenders in crucial sectors like transport, green energy, and infrastructure. Previously, these sectors were insulated from foreign competition, making this opportunity unprecedented, according to trade experts.
The agreement stipulates that UK firms participating in specified areas will receive treatment equivalent to that of Indian suppliers, thereby granting them real-time access to public tender information. Moreover, UK products can qualify for government tenders if they comprise at least 20% local input, offering companies the flexibility to source the majority of their materials from abroad.
Dr. Arpita Mukherjee from the Indian Council for Research on International Economic Relations points out that while UK companies are recognized as Class-II local suppliers, they will still face an uphill battle due to the preferential treatment enjoyed by Class-I Indian suppliers. Additionally, UK firms often contend with higher pricing, which may hinder their competitiveness in the bidding process.
Experts emphasize that delayed payments and contract enforcement issues present significant barriers for UK companies seeking to enter the Indian market. A study on public procurement found that outstanding payments to suppliers often exceeded the total annual average procurement value, raising worries about liquidity and long-term contract sustainability for UK businesses.
Although recent efforts such as the creation of online portals aim to improve transparency in the tendering process, issues with timely payments remain problematic, reflecting India’s low ranking—163 out of 190—on contract enforcement in the World Bank's Doing Business report.
Despite these challenges, the agreement indicates a substantial policy evolution. Analysts believe it reflects the Indian government's strategy to open procurement spaces typically reserved for local enterprises, which may lead to future concessions for foreign players in trade deals with the US and beyond. This bold move is perceived as a demonstration of confidence in the competitiveness of Indian firms both locally and internationally.
While British companies may find themselves in a complex regulatory environment marked by delayed payments and complicated procurement processes, the transition positions India to potentially modernize its procurement standards to align with global practices, which could bring about enhanced accountability and efficiency in the long run.
UK companies are now eligible to bid for a vast array of government contracts in India, following a landmark free trade agreement signed last month. This deal, a significant shift in India’s procurement policy, allows British businesses to compete for approximately £38 billion worth of high-value tenders in crucial sectors like transport, green energy, and infrastructure. Previously, these sectors were insulated from foreign competition, making this opportunity unprecedented, according to trade experts.
The agreement stipulates that UK firms participating in specified areas will receive treatment equivalent to that of Indian suppliers, thereby granting them real-time access to public tender information. Moreover, UK products can qualify for government tenders if they comprise at least 20% local input, offering companies the flexibility to source the majority of their materials from abroad.
Dr. Arpita Mukherjee from the Indian Council for Research on International Economic Relations points out that while UK companies are recognized as Class-II local suppliers, they will still face an uphill battle due to the preferential treatment enjoyed by Class-I Indian suppliers. Additionally, UK firms often contend with higher pricing, which may hinder their competitiveness in the bidding process.
Experts emphasize that delayed payments and contract enforcement issues present significant barriers for UK companies seeking to enter the Indian market. A study on public procurement found that outstanding payments to suppliers often exceeded the total annual average procurement value, raising worries about liquidity and long-term contract sustainability for UK businesses.
Although recent efforts such as the creation of online portals aim to improve transparency in the tendering process, issues with timely payments remain problematic, reflecting India’s low ranking—163 out of 190—on contract enforcement in the World Bank's Doing Business report.
Despite these challenges, the agreement indicates a substantial policy evolution. Analysts believe it reflects the Indian government's strategy to open procurement spaces typically reserved for local enterprises, which may lead to future concessions for foreign players in trade deals with the US and beyond. This bold move is perceived as a demonstration of confidence in the competitiveness of Indian firms both locally and internationally.
While British companies may find themselves in a complex regulatory environment marked by delayed payments and complicated procurement processes, the transition positions India to potentially modernize its procurement standards to align with global practices, which could bring about enhanced accountability and efficiency in the long run.
