India May Open $50 Billion Government Contracts to US and Foreign Firms: Report

India is poised to make a notable change in its procurement policy by potentially allowing foreign companies, including US firms, to bid on central government contracts—a development tied to trade negotiations with Washington.

According to two senior officials speaking to Reuters, the Indian government could soon grant foreign access to contracts valued over $50 billion, primarily from federal departments. The move is part of a broader objective to finalize a limited trade agreement with the United States by early July.

Similar Step Taken with the UK

This move mirrors a recent arrangement with the United Kingdom, under which certain British firms were granted entry to central government tenders through the India-UK Free Trade Agreement.

These steps reflect a gradual shift away from India’s traditionally protectionist procurement stance.

“In a policy shift, India has agreed to open its public procurement contracts gradually to trading partners including the U.S. in a phased manner and reciprocal manner,” said an official familiar with the negotiations.

India's Procurement Market Overview

India's public procurement market is valued at approximately $700–750 billion each year, covering expenditures by central, state, and local governments. However, the initial phase of the policy will grant access only to contracts issued by federal agencies  State and municipal tenders are not part of the current plan, officials told Reuters.

Deal Timed with US Tariff Pause

The decision aligns with Trade Minister Piyush Goyal’s recent visit to Washington, aimed at boosting the pace of negotiations. Both sides aim to conclude a temporary trade pact before President Trump’s 90-day tariff suspension ends in July.

The US had earlier threatened a 26% tariff on specific Indian exports if no trade resolution is reached.

Domestic Safeguards Still in Place

India has historically resisted joining the World Trade Organization’s Government Procurement Agreement, arguing the need to protect domestic micro and small enterprises (MSMEs).

Officials assert that India’s new policy won’t undermine this principle.

“A quarter of government contracts will remain reserved for Indian small businesses,” said Anil Bhardwaj, secretary general of FISME, which represents MSMEs.

Furthermore, the Commerce Ministry clarified that foreign access will be limited to non-sensitive sectors and will be reciprocated with similar access for Indian companies abroad.

Global Opportunities for Indian Exporters

This policy could unlock international tendering opportunities for Indian exporters, while also serving as leverage in trade talks.

“Opening procurement to foreign firms on a reciprocal basis offers an opportunity for Indian businesses in overseas markets as well,” Bhardwaj added.

Conclusion: A Balanced Leap Toward Global Trade Integration

India’s decision to partially open its extensive government procurement market to foreign bidders represents a strategic shift toward trade liberalization—one that carefully maintains safeguards for domestic micro and small enterprises (MSMEs). While this move is designed to facilitate a mutually beneficial trade deal with the United States, it also reflects India’s evolving role as a confident player in global commerce.

For Indian exporters, the change could unlock new international tendering opportunities, while for foreign companies, it marks a significant entry point into one of the world’s largest public procurement markets. As negotiations unfold, the precise sectors and terms included will shape the impact on both local industry and global trade dynamics.

This calibrated opening could pave the way for broader economic cooperation, increased competitiveness, and greater integration into global supply chains.