Opening up procurement 

News: Recently, the Comprehensive Economic Partnership Agreement (CEPA) was signed between India and the United Arab Emirates last month.

Further, such a free trade agreement is also going to be signed between India and Australia.  

What are the provisions in the India-UAE trade deal?  

The deal provides for harmonisation in the regulatory system. It also attempts to address tariff-based trade issues. For example, pharmaceutical products from Indian companies that were subjected to high regulatory bars in the Western countries will to receive time-bound regulatory nods by the UAE authorities. 

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How is the deal advantageous for India? 

Allowing cross-country public procurement will lead to competitiveness within the economy and can reduce costs and increase efficiency in government functioning. It will benefit the exchequer and the end-user. 

It will provide incentives to Indian companies. They will be able to bid for projects in other jurisdictions. 

What are the challenges ahead? 

In the recent past, the government procurement policies focused on local sourcing for the government requirements.  

In addition to the protection given to micro, small, and medium enterprises, the government has also provided protection to the construction and infrastructure sector under the CEPA. This protection was not required in the infra sector. There is a requirement of foreign finance and expertise to supplement scarcity in this Indian sector.  

Way Forward 

The government must take forward partial opening up of public procurement in this agreement and extend it to other trade negotiations as well as to more sectors of the economy. 

There is a need for developing competitiveness in the construction and infrastructure sector. It will allow Indian companies to participate more effectively in a global public infrastructure market. 

Source: The post is based on an article “Opening up procurement” published in the Business Standard on 31st Mar 22.