India-UK FTA: Balancing Global Trade and Domestic Interests

India's trade pact with the UK includes a contentious chapter on government procurement, stirring debate over market access and domestic industry protection. With MSMEs at risk and strategic sectors urged for exclusion, policymakers are urged to navigate carefully to safeguard local interests against intensified foreign competition.

The recently concluded India-UK Free Trade Agreement (FTA) has raised concerns within India due to its chapter on government procurement. Union Commerce and Industry Minister Piyush Goyal announced that while UK-based suppliers can bid for government tenders over Rs 200 crore, the access is limited to non-sensitive central entities, excluding sub-central government levels.

In a groundbreaking move, the UK has agreed to provide non-discriminatory treatment to Indian suppliers under its Social Value regime. Nevertheless, the Global Trade Research Initiative (GTRI) has cautioned India about possible risks, particularly for Micro, Small, and Medium Enterprises (MSMEs), due to the heightened competition this agreement invites.

The FTA allows UK firms participation in central government tenders, with companies having just 20% UK content categorized as 'Class 2 Local Suppliers' under the Make in India initiative. GTRI warns that this could endanger Indian MSMEs and recommends shielding strategic sectors like defense and infrastructure from foreign access to protect national interests.

(With inputs from agencies.)