India is set to make a notable policy shift by opening a substantial portion of its federal government procurement market to foreign companies, including US firms, as part of ongoing trade negotiations with Washington. According to two senior government officials speaking to Reuters, contracts worth over $50 billion—primarily issued by central government agencies—could soon become accessible to US businesses in a phased and reciprocal manner.
This move follows a similar concession made recently to the United Kingdom under the India-UK Free Trade Agreement, where British firms were granted access to select central government tenders, signaling India’s gradual departure from its traditionally protectionist stance on public procurement.
While India’s total public procurement market—including central, state, and local government spending—is estimated at $700–750 billion annually, only federal contracts will be opened to foreign bidders initially. State and municipal tenders will remain protected for the time being.
The development coincides with trade minister Piyush Goyal’s visit to Washington aimed at accelerating bilateral talks, with both countries targeting an interim deal before the 90-day tariff pause announced by then-President Donald Trump expires in July. The US had threatened a 26% tariff on certain Indian imports if no agreement was reached.
India has historically resisted joining the WTO’s Government Procurement Agreement to protect domestic small businesses. However, officials emphasize that this new approach will preserve protections by reserving about a quarter of government contracts exclusively for Indian micro and small enterprises, according to Anil Bhardwaj, secretary general of FISME, an industry body representing small businesses.
The commerce ministry insists that foreign access will be tightly controlled—limited to non-sensitive sectors and strictly reciprocal, meaning Indian firms will gain comparable access in foreign markets.
For Indian exporters, this shift could open up new opportunities to participate in global government tenders, while giving New Delhi stronger bargaining power in trade negotiations. As Bhardwaj noted, “Opening procurement to foreign firms on a reciprocal basis offers an opportunity for Indian businesses in overseas markets as well.”
Overall, this measured opening of government procurement reflects India’s strategic balancing act—liberalizing key sectors to secure beneficial trade deals without compromising the protection of domestic enterprises.
