India and the UK have agreed to open their public procurement markets under the upcoming CETA trade deal. Indian companies will get non-discriminatory access to UK government contracts worth US$ 122 billion, while UK firms can access India’s US$ 114 billion central government tenders. India has protected its MSME policies and excluded sensitive sectors like Railways and Defence.
Commerce Secretary Sunil Barthwal announced on Friday that the public procurement provisions under the India-UK Comprehensive Economic and Trade Agreement (CETA) will provide Indian companies with non-discriminatory access to a US$ 122 billion market. “For the first time the UK has agreed to take a binding commitment to provide non-discriminatory treatment for Indian suppliers under the UK’s social value regime,” he stated. In return, India’s commitments under the agreement are set to open up a US$ 114 billion market for UK suppliers.
The UK’s social value regime requires public sector bodies to assess the broader social, economic, and environmental impacts of their procurement decisions—meaning they must consider how a supplier’s work benefits communities and the environment, beyond just its cost.
Greater flexibility raises concerns
India-UK CETA is only the second trade agreement signed by India to include a chapter on government procurement. “The first was the one signed with the United Arab Emirates (UAE) in 2022 but it has many restrictions. In comparison, under the India-UK CETA, both the parties have offered meaningful market access to each other,” another official said.
However, experts have raised concerns over the greater flexibility provided to UK firms under this agreement, particularly when compared to India’s trade pact with the UAE.
The public procurement terms under CETA preserve India’s existing rules that restrict foreign access to contracts below specific thresholds. For goods and services, India’s limit is set at Rs 5.5 crore, while the UK’s is comparatively lower at Rs 1.6 crore. For construction services, both countries have agreed to a common threshold of Rs 60 crore.
In contrast, the India-UAE CEPA allows limited access only to a few central government bodies, with much higher thresholds—around Rs 250 crore for goods, services, and construction. Additionally, the UAE continues to follow policies that favour domestic players, such as mandatory local value addition, price preferences for green products, and no assurance of equal treatment for Indian suppliers.
Safeguards for MSMEs and local sourcing
India has also ensured that its preferential procurement policy for Micro, Small and Medium Enterprises (MSMEs) remains intact. UK suppliers can participate as “Class-II local suppliers” if at least 20% of their product or service comes from the UK. Indian suppliers will continue to receive preference as “Class-I local suppliers” if over 50% of the product or service is sourced domestically.
India’s commitments are limited to central government ministries, departments, and their subordinate offices. State-level procurement, local governments, and central public sector enterprises are not part of the agreement.
Indian firms will gain guaranteed access to procurement opportunities by key UK government departments, such as the Cabinet Office, Department for Business and Trade, National Highways, NHS Foundation Trusts (Department of Health and Social Care), Foreign, Commonwealth and Development Office, and the Department for Education.
In addition, Indian suppliers can also participate in procurement by select educational institutions like Belfast Metropolitan College, Northern Regional College, and North West Regional College—opportunities not typically extended to all UK trading partners.
Key sectors remain outside the agreement
Despite the expanded market access, both India and the UK have taken a cautious approach in protecting their strategic sectors.
India has excluded several sensitive areas from the agreement’s scope, including Indian Railways, the Food Corporation of India, and handloom sectors. Key infrastructure entities like the National Industrial Corridor Development Corporation Limited, which oversees smart industrial cities, have also been kept out.
Other excluded sectors include arms and ammunition, MSME-targeted procurement policies, and food and agriculture support programs, which are shielded from UK participation.
On its part, the UK has carved out similar exclusions, keeping procurement related to its Space Agency, as well as areas such as defence and security, agricultural products, drinking water, energy, transport, and postal services outside the deal’s purview.
These exclusions reflect a balanced approach, where both nations have embraced greater trade openness while retaining the flexibility to protect core economic and strategic interests.
