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Allowing UK firms to compete on near-equal terms could crowd out Indian MSMEs: GTRI
May-08-2025

The Global Trade Research Initiative (GTRI) Founder Ajay Srivastava has said that allowing UK firms to compete on near-equal terms could crowd out Indian Micro, Small, and Medium Enterprises (MSMEs), which depend heavily on protected access to government contracts. He said it also dilutes one of India's last remaining industrial policy tools - GP preferences - used to promote domestic manufacturing, innovation, and jobs. 

GTRI Founder said after the UAE, India has opened its central government procurement (GP) for British companies under the free trade agreement (FTA) announced on May 6, 2025, subject to certain conditions. British firms can now bid for tenders, and those with just 20 per cent UK content will be treated as Class 2 Local Suppliers under India's Make in India policy. This effectively extends preferential treatment designed for Indian firms to foreign suppliers. While UK companies gain broad access to India's procurement system, Indian firms remain largely excluded from the UK's closed and highly competitive GP market. With little reciprocal benefit, this sets a dangerous precedent for future FTAs and weakens India's leverage to defend domestic interests. 

He further said India has so far opted out of the WTO's Government Procurement Agreement (GPA), preserving its right to favour domestic firms. Under current policy, 25 per cent of government contracts are reserved for MSMEs, with sub-quotas for SC/ST- and women-owned enterprises. In defense procurement, 25 per cent of components must be sourced from Indian MSMEs. In the FTA with the UK, he said a foreign country has received legally guaranteed access to India's central government procurement market.


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