India to open $50 bn public procurement to American firms under new trade shift, claims report

India is preparing to open a significant portion of its protected government procurement market—worth over $50 billion — to US firms, according to a Reuters report, marking a strategic shift that could soon extend to other trading partners.

The move, driven by ongoing trade negotiations with Washington, follows a similar agreement struck with the United Kingdom earlier this month. 

India’s public procurement sector is estimated at $700-750 billion annually, with the lion’s share traditionally reserved for domestic firms, including 25% specifically for small businesses.

“In a policy shift, India has agreed to open its public procurement contracts gradually to trading partners including the US in a phased and reciprocal manner,” one official familiar with the discussions was quoted as saying in the report.

According to the officials, the initial offer to the US will focus on federal contracts, leaving state and local procurements off the table. The sectors covered are expected to include goods, services, and construction.

The Indian commerce ministry did not comment on the US proposal or whether similar terms might be extended to other countries. However, officials, the report added, indicated that the new approach is designed to balance international access with domestic safeguards.

Trade Minister Piyush Goyal was in Washington this week to advance the deal, with both countries targeting an interim agreement by early July. The timing is crucial, aligning with a 90-day pause on tariff hikes announced by former US President Donald Trump in April, which includes a 26% tariff on Indian imports.

Earlier this month, India offered the UK limited access to bid on federal projects above ₹2 billion, excluding sensitive sectors and all state-level procurement. In return, UK firms will offer Indian suppliers non-discriminatory access to their own procurement system.

Anil Bhardwaj, secretary general of the Federation of Indian Micro, Small and Medium Enterprises, told Reuters that domestic firms have been reassured their interests will be protected. “Opening procurement to foreign firms on a reciprocal basis offers an opportunity for Indian businesses in overseas markets as well,” he said.