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EU won’t get further access to government business

Economic Times, India

EU won’t get further access to government business

By Amiti Sen, ET Bureau

2 April 2012

NEW DELHI: India will not concede to EU’s demand that European companies be allowed to participate in procurements made by public sector enterprises in the country as part of a free trade agreement being negotiated.

New Delhi has said that its commitment on government procurement will not go beyond the existing domestic provisions that allow foreign companies to bid for procurements by ministries and departments for self consumption, according to a government official.

The EU has sought unhindered access to India’s government procurement market estimated at about $150 billion per annum.

"The EU has positioned government procurement as a critical area for signing the free trade deal," the official told ET. "It is insisting that India should provide market access in Central entities and PSUs, but India has put its foot down."

The government has stressed that procurement market access being discussed would cover purchases for government purposes only and not what is done for commercial sale or resale. That is why PSUs can not be covered. Sourcing by the Indian Railways and the National Highways Authority of India will also remain restricted territories for EU companies.

In a meeting with EU trade commissioner Karel De Gucht in Delhi last month, commerce and industry minister Anand Sharma explained that India was in the process of formulating a public procurement law which would be mandatory for all Central government entities engaging in procurement.

Since the draft bill is still being discussed with stakeholders, the minister said it might not be possible for India to undertake commitments on areas that are still under discussion.

"India has also clarified that procurement market access being discussed would cover procurement for government purposes only and not that done for commercial sale or resale," the official added.

A number of developed countries, including the EU and the US, are keen that India join the government procurement agreement of the World Trade Organisation that is a plurilateral agreement signed between 42 member countries. India is an observer in the GPA meetings, but has so far resisted attempts of other countries to rope it in.

India has also asked the EU to clarify what India would gain by including government procurement in the bilateral free trade agreement. According to a study carried out by the Centre for WTO Studies at the Indian Institute of Foreign Trade, total government sourcing done by the EU from foreign companies is less than 1% of total purchases.