Government sources have told CNBC TV18 that the United Kingdom (UK) has agreed for the first time to take a binding commitment to provide non-discriminatory treatment to Indian companies in government procurement. Under the recently finalised India-UK FTA (Free Trade Agreement), Indian companies will get non-discriminatory treatment under the UK’s Social Value regime. The British Social Value law mandates government departments to factor in economic, social, and environmental well-being for public service contracts.Sources added that the British govt sees the FTA as providing unique and unprecedented access to British businesses in India’s public procurement market, which comprises around 40,000 tenders with a value of £38 billion per year.
On opening up of government procurement for British companies, sources had earlier said that British firms would be allowed participation only in the procurement of goods and services of non-sensitive central-level entities in India. The FTA also provides a carve-out for the ‘Make in India’ policy as well as for medium and small enterprises.
India’s government procurement market is estimated at nearly $600 billion annually, which is around 15% of the country’s GDP. UK is the 2nd country for which government procurement has been opened up in India after it was opened up for the UAE under the FTA. Emirati firms are allowed participation in procurement tenders worth over ₹200 crores in India, which will now also apply to British companies.As per the revised Public Procurement (Preference to Make in India) Order 2017 which introduced distinctions of Class-I, Class-II, and non-local suppliers for the purpose of preference in government procurement, Class-I local suppliers get the highest preference. Access to state and local government-level entities will continue to exclude British companies, while suppliers allowed to bid for domestic tenders will be deemed as Class II local suppliers. By definition, Class-I local suppliers have a domestic value addition (DVA) of over 50% while Class-II suppliers have DVA from 20% to 50%.
On opening up of government procurement for British companies, sources had earlier said that British firms would be allowed participation only in the procurement of goods and services of non-sensitive central-level entities in India. The FTA also provides a carve-out for the ‘Make in India’ policy as well as for medium and small enterprises.
India’s government procurement market is estimated at nearly $600 billion annually, which is around 15% of the country’s GDP. UK is the 2nd country for which government procurement has been opened up in India after it was opened up for the UAE under the FTA. Emirati firms are allowed participation in procurement tenders worth over ₹200 crores in India, which will now also apply to British companies.As per the revised Public Procurement (Preference to Make in India) Order 2017 which introduced distinctions of Class-I, Class-II, and non-local suppliers for the purpose of preference in government procurement, Class-I local suppliers get the highest preference. Access to state and local government-level entities will continue to exclude British companies, while suppliers allowed to bid for domestic tenders will be deemed as Class II local suppliers. By definition, Class-I local suppliers have a domestic value addition (DVA) of over 50% while Class-II suppliers have DVA from 20% to 50%.
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