UK firms bidding for Indian government contracts worth £38 billion face a mixture of unprecedented opportunities and daunting challenges following the recent India-UK free trade agreement. This landmark deal enables UK suppliers to compete in strategic sectors, including green energy and infrastructure, previously shielded from foreign businesses. Experts label the access as a significant turning point, significantly surpassing what India offered in its arrangement with the UAE.
According to trade analyst Ajay Srivastava from the Global Trade Research Initiative, UK businesses will now enjoy nearly equal footing with local Indian suppliers, gaining real-time access to public tender information. The agreement allows UK goods made with just 20% domestic components, providing flexibility in sourcing materials globally while still qualifying for Indian contracts. Additionally, the threshold for project bids has been lowered, enabling UK firms to compete for a broader range of smaller projects such as rural roads and IT systems.
Despite this progress, experts caution that the path forward for UK companies is fraught with complexities. Indian firms maintain an advantage in pricing, with UK companies likely to face challenges due to their higher costs. Moreover, issues such as delayed payments and difficult contract enforcement remain significant hurdles rooted in India’s public procurement legacy. As noted by Srijan Shukla of the Observer Research Foundation, overdue payments can dramatically affect suppliers, contributing to the country's poor standing in contract enforcement, ranking 163rd out of 190 nations.
Although initiatives like online procurement portals have introduced more transparency to the tendering process, persistent payment issues continue to plague government contracts. The trade agreement's lack of provisions addressing such concerns and its exemption from specific dispute resolutions highlight the challenges that UK firms may encounter.
Despite these red flags, India's willingness to involve foreign players in its procurement market marks a pivotal shift in policy, revealing a commitment to economic openness and increased competition. As India plays catch-up in incorporating procurement clauses in trade deals, the government appears confident in the ability of its domestic firms to thrive amid international competition. Observers hope this integration will foster greater accountability from the Indian government, streamlining practices to align with global standards.
According to trade analyst Ajay Srivastava from the Global Trade Research Initiative, UK businesses will now enjoy nearly equal footing with local Indian suppliers, gaining real-time access to public tender information. The agreement allows UK goods made with just 20% domestic components, providing flexibility in sourcing materials globally while still qualifying for Indian contracts. Additionally, the threshold for project bids has been lowered, enabling UK firms to compete for a broader range of smaller projects such as rural roads and IT systems.
Despite this progress, experts caution that the path forward for UK companies is fraught with complexities. Indian firms maintain an advantage in pricing, with UK companies likely to face challenges due to their higher costs. Moreover, issues such as delayed payments and difficult contract enforcement remain significant hurdles rooted in India’s public procurement legacy. As noted by Srijan Shukla of the Observer Research Foundation, overdue payments can dramatically affect suppliers, contributing to the country's poor standing in contract enforcement, ranking 163rd out of 190 nations.
Although initiatives like online procurement portals have introduced more transparency to the tendering process, persistent payment issues continue to plague government contracts. The trade agreement's lack of provisions addressing such concerns and its exemption from specific dispute resolutions highlight the challenges that UK firms may encounter.
Despite these red flags, India's willingness to involve foreign players in its procurement market marks a pivotal shift in policy, revealing a commitment to economic openness and increased competition. As India plays catch-up in incorporating procurement clauses in trade deals, the government appears confident in the ability of its domestic firms to thrive amid international competition. Observers hope this integration will foster greater accountability from the Indian government, streamlining practices to align with global standards.
