New Delhi: Australia plans to gun for India’s $500 bn-public procurement market after New Delhi threw open access to public tenders in the free trade agreement with the United Arab Emirates.
The inclusion of public procurement in the UAE agreement marked a first for India, which has been notoriously shy of opening up this lucrative market to foreign companies. Australia, which too is negotiating a Comprehensive Economic Cooperation Agreement (CECA), will be pushing for Australian companies to be allowed to compete with Indian ones for tenders floated by central government departments and ministries for goods and services.
“Chief negotiators are discussing the scope of CECA, which will include further market access commitments for goods and services, as well as digital trade and government procurement. We will also explore new areas of cooperation,” a spokesperson for the Australian High Commission said in response to a query.
In the past, New Delhi has been against opening up the government procurement market in a trade agreement, largely to protect the interest of the medium and small scale industry that relies heavily on government tenders for business. In a major policy shift by the Modi government, public procurement of contracts worth over ₹200 crore were opened up in the UAE FTA.
“Comprehensive trade agreements cover government procurement. However, a country can make carve-out for certain sectors. In the case of India many sectors are under state government or joint jurisdiction and there is no clear regulation on government procurement. Countries do have threshold limits and other requirements for government procurement,” said Arpita Mukherjee, professor, ICRIER.
The India-UAE pact, for instance, excludes government procurement in areas such as construction and infrastructure projects, and healthcare, including medical devices and pharmaceuticals.
“It is unfortunate that public procurement was opened up for the UAE which is one of the world’s most open markets. Products from any country can come into the UAE duty-free. India has not reached that stage. Public procurement can be opened after MSMEs become stronger — we are still fragile,” said V.K. Agarwal, former president of the Federation of Indian Micro and Small & Medium Enterprises (FISME) and current chairman of its policy committee.
“We have seen how FTAs in the past such as one with ASEAN have ruined MSMEs. LEDs, chipsets, LCDs came in from elsewhere ….everything came in through these countries and we did not push our companies to develop it. Look at cooking oil. The ASEAN agreement prodded the entire ASEAN group to export to India and our own oil producers went down the dump,” said Vinod Kumar, president of the India SME Forum.
“We have been asking for a consultation specific to MSMEs because eventually whatever FTA we are doing, it is going to impact MSMEs.”
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