India-UK Trade Agreement: Potential Threat to Domestic Industries?

A report by GTRI urges India to cautiously implement the Government Procurement chapter in the India-UK FTA. The agreement could expose local industries, particularly MSMEs, to heightened foreign competition, challenging India's industrial strategies and domestic initiatives like 'Make in India' and 'Atmanirbhar Bharat'.

The Global Trade Research Initiative (GTRI) has flagged concerns over the recently concluded India-UK Free Trade Agreement, specifically surrounding the Government Procurement (GP) chapter. The chapter's implementation might bring increased foreign competition that threatens India's domestic industry, particularly the Micro, Small and Medium Enterprises (MSMEs).

Estimates indicate that India's GP market is one of the world's largest, worth nearly $600 billion annually, amounting to approximately 15% of the national GDP. This expenditure supports sectors crucial to national infrastructure, healthcare, education, transport, power, and defense. Government procurement plays a strategic role in boosting local manufacturing and fortifying MSME capabilities, aligning with national schemes like 'Make in India' and 'Atmanirbhar Bharat'.

Despite India's exclusion from the World Trade Organization's Government Procurement Agreement, which allows a protective policy, the India-UK FTA introduces policy shifts that may offer UK firms opportunities to bid on Indian central government tenders. GTRI warns that such access to UK companies could marginalize Indian MSMEs dependent on reserved government contracts. Excluding strategic sectors from foreign access, GTRI advises, would better safeguard India's industrial interests.

(With inputs from agencies.)