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India has no plans to join the WTO govt procurement agreement

Mint | 6 May 2022

India has no plans to join the WTO govt procurement agreement

by Ravi Dutta Mishra, Dilasha Seth

NEW DELHI : India has “no plans" to join the government procurement agreement grouping of the World Trade Organization (WTO), but is open to negotiating such agreements as part of bilateral deals.

It already figures in the free trade agreement signed with the UAE, and while this may act as a template for all future bilateral free-trade agreements the scope and coverage of the section may vary, the ministry of commerce and industry said in the section on frequently asked questions on the India-UAE Comprehensive Economic Partnership Agreement (CEPA). Pacts under negotiation include those with Canada, the EU, Israel and the UK.

The India-UAE agreement, which came into effect on 1 May excludes government procurement for several union ministries. While this was the first time India had included government procurement in a free-trade pact, it is only limited to a few central ministries and excludes key sectors such as construction, infrastructure projects and health care, including medical devices and pharmaceutical products.

“India is an observer under WTO Agreement on government procurement since 2010 and, as of now, there is no plan to join the same," the ministry added. “Since it is the first time we are having a full text on GP, it has been carefully examined and developed after wider inter-ministerial, stakeholder consultations. In future agreements, the GP chapter text may become a template, and the scope and coverage of the GP chapter may vary depending on the ambition," it added.

Under the pact, only government procurement contracts worth over ₹200 crore will be allowed for UAE-based companies on the same terms as Indian firms. Government procurement is open to 34 ministries and departments, including power and education.

Earlier, India never took up government procurement for bilateral or multilateral trade agreements in order to protect domestic firms. This was one of the bottlenecks in several key FTA negotiations, including the one with the EU.

State-owned firms and the defence ministry are excluded from GP.

“Only limited central government ministries are covered, that too with high thresholds for procurement of goods, services and construction services… excluded are subordinate entities of the central ministries including departments and attached bodies, autonomous bodies, government-owned firms, public sector enterprises, regulators or any other entity, wholly or partially, under the central government," said the FAQs.

Prof Arpita Mukherjee of ICRIER said that the provision for a GP chapter is good as some Indian companies are also asking for access to the GP market in countries like the UK.

“Many of our trading partners are already part of the WTO GPA. There are two core issues. First, we do not have a comprehensive domestic regulation. Second, many sectors especially healthcare in a pandemic situation is out of the agreement. We also need to review the depth and coverage of the agreement," she said.

 source: Mint