Opportunities For Procurement On The Horizon As UK Concludes Free Trade Agreement With India

On 6 May 2025, the UK government announced it had concluded a Free Trade Agreement (FTA) with India. A summary of the deal has been published by the Department for Business and Trade. With widespread uncertainty concerning global trade policy and tariffs, the conclusion of the deal is being celebrated as a triumph.

India's economy is expected to be the third largest in the world by 2028 and opening the market to UK businesses will offer new opportunities in procurement. The UK government has reported that "UK businesses will have guaranteed and unprecedented access to India's vast procurement market. India's federal government bodies covered by the agreement publish around 40,000 tenders, worth at least £38 billion in total, a year"¹.

India is an important market to the UK: total exports to India in 2024 were £17.1 billion and India was the UK's eleventh largest trading partner,² and this is set to increase in importance because of India's high growth rate and access to a large number of consumers. Previously high barriers of trade have prevented certain UK businesses from accessing the market. The FTA is designed to bring down these barriers for the mutual benefit of businesses in both countries.

The full text of the agreement has not yet been published, as some issues remain to be resolved between the countries. Once the legal text is finalised the FTA will be signed. The UK government has not yet announced when it expects this to be.

Key aspects of the anticipated FTA regarding procurement³:

1. Opening of India's public procurement market. The government's summary of the FTA estimates that as a result of the deal, UK businesses will have a unique opportunity to access 40,000 procurements. The summary of the chapter identifies construction procurements specifically (as well as general goods and services) as areas for which UK businesses will be able to compete. It is expected that UK businesses will have a guaranteed right to compete for a proportion of contracts that meet certain criteria. These are to be specified in India's schedule and will be something businesses should look out for once published.
2. Exclusive treatment in certain areas will put UK businesses on a more even footing with businesses that operate in India. The "Make in India" policy gives preferential treatment for home-based manufacturing and production in federal government procurements. The FTA would allow UK companies to be treated comparably to a class 2 supplier if at least 20% of their goods and services are made in the UK – this was previously a designation only available to Indian businesses. Where a supplier can offer 50% or more of their goods and services from India, they will be categorized as a class 1 supplier and still receive preferential treatment.
3. Ensuring government procurement processes in both countries are fair, open and transparent. The chapter summary does not go into further detail about how this will be achieved, but reference is made to UK businesses being able to access information on published tender notices for free using India's single website portal.

Other aspects of the FTA which we have identified will support procurement opportunities:

1. Opportunities for UK businesses in green infrastructure and energy sectors. The FTA includes unprecedented environmental commitments from India. This could include UK businesses working in the areas of renewable energy equipment, clean energy industry, transport and recycling⁴. Given the UK's expertise, UK businesses could be at an advantage in procurements in these areas⁵.
2. Promotion of small and medium-sized enterprises (SMEs)⁶. This chapter includes proposals between UK and India on cooperation and information sharing. It is envisaged that more trade information will be accessible online in easier to understand formats, so that India's systems and processes can be understood more easily and reduce costs for acquiring information and expertise by SMEs The government has said it is possible they may also share best practice on issues like finance, which have affected some SMEs' capacity to enter the market. The proposed reduction in tariffs and streamlining customs procedures, which is likely to particularly benefit SMEs in the automotive, beverage, life sciences, manufacturing and agri-food industries. Investors in these companies will, in turn, receive greater legal certainty and protection for their cross-border investments.
3. Tackling unfair commercial practices by state-owned enterprises (SOEs)⁷. This chapter is set to address advantageous treatment of SOEs due to their relationship with government. To encourage effective competition between private enterprises and government businesses it is indicated that SOEs will provide commitments that they operate in accordance with commercial practices and there be the ability to raise concerns. It is suggested that UK and Indian authorities will work together regarding any such concerns that arise. It is unclear at this time how the commitments will work (and whether they take on voluntary or mandatory form) and the anticipated repercussions that may be proposed for violating them.
4. Securing market access for a variety of service sectors of telecommunications services, environmental services and construction services⁸. This will include UK businesses facing less restrictions in terms of the number of businesses able to supply a service. Helpful provisions are set to include no residency requirement or any requirement to set up a company in India for telecommunication services, environmental services or construction services. The FTA will also look at information published on licenses, giving applicants status updates and assigning reasonable fees.

This article was also authored by our trainee solicitor, Elise Marguerite Borg.

Footnotes

1 House of Commons Library – Research Briefing: UK-India Free Trade Agreement published 9 May 2025 (UK-India Free Trade Agreement - House of Commons Library).

2 Trade and Investment Factsheets, India, Department for Business & Trade, UK Government published 2 May 2025.

3 Department for Business and Trade - Policy Paper: UK-India trade deal: conclusion summary published 6 May 2025, Chapter 4.13 Government Procurement.

4 Department for Business and Trade - Policy Paper: UK-India trade deal: conclusion summary published 6 May 2025, Chapter 4.9 Environment.

5 Department for Business and Trade - Policy Paper: UK-India trade deal: conclusion summary published 6 May 2025, Chapter 3 An agreement that delivers growth.

6 Department for Business and Trade - Policy Paper: UK-India trade deal: conclusion summary published 6 May 2025, Chapter 4.21 Small and Medium-sized enterprises.

7 Department for Business and Trade - Policy Paper: UK-India trade deal: conclusion summary published 6 May 2025, Chapter 4.23 State owned enterprises.

8 Department for Business and Trade - Policy Paper: UK-India trade deal: conclusion summary published 6 May 2025, Chapter 4.27 Trade in Services.

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