India-UK trade deal opens up government procurement for Indian medicines, software services, but British firms may struggle to gain ground, say experts

Indian firms may be on a better footing

Indian firms are poised to make substantial gains under the government procurement chapter of the India-UK free trade agreement signed on July 24, but UK companies may find it difficult to secure contracts in India due to structural and regulatory hurdles, experts say.

The agreement, part of the broader Comprehensive Economic and Trade Agreement (CETA), provides mutual access to government procurement markets—a first for India in a bilateral FTA. It opens the door to a $122 billion public procurement market in the UK for Indian suppliers, while UK firms will have access to $114 billion worth of Indian procurement, subject to certain thresholds and exclusions.

Under the terms of the agreement, Indian firms can bid for UK government contracts with a minimum threshold of Rs 1.6 crore, while UK firms can access tenders above Rs 5.5 crore in India.

Drug makers and software exporters among key beneficiaries

One of the most significant outcomes of the deal is potential access for Indian pharmaceutical firms to the UK’s National Health Service (NHS) procurement. The NHS has been listed among the public entities eligible to source goods and services from Indian suppliers.

“There is a significant boost expected in the UK’s NHS procurement of Indian API and high-end generics, which currently constitute 25 percent of prescription drugs,” the Commerce Ministry said in a statement on July 25.

Experts also point to technical textiles, software services, and office equipment as promising sectors for Indian exporters under the relaxed procurement norms. “If Indian firms meet the quality standards, they are likely to benefit from this opening—especially in services, where India holds a clear comparative advantage,” said Agneshwar Sen, trade policy leader at EY.

UK firms face roadblocks in Indian market

Despite access being granted, UK suppliers may struggle to compete under India's L1 procurement system, which typically awards contracts to the lowest bidder.

“UK firms may find it challenging to enter the Indian market under the L1 system, even with the relaxed rules,” Sen noted.

India has provided some flexibility under its Public Procurement (Preference to Make in India) Order by classifying UK suppliers with at least 20 percent local content as Class-II suppliers, placing them on par with Indian companies. However, this may not be sufficient for UK firms to compete effectively in a price-sensitive environment.

Key sectors remain excluded

India has kept several strategic and sensitive sectors outside the agreement’s purview. These include procurement by the Indian Railways, Food Corporation of India, Handloom sectors, and entities like the National Industrial Corridor Development Corporation Limited, which oversees industrial smart cities.

In addition, arms and ammunition, MSME-specific procurement policies, and food and agricultural support programs are also excluded from UK participation.

Similarly, the UK has carved out exclusions for procurement by its Space Agency, as well as in sectors such as defence security, agricultural products, drinking water, energy, transport, and postal services.

While the deal marks a major step forward in trade liberalisation, it also underscores the pragmatic caution both sides have exercised in protecting sensitive sectors, even as they seek to boost bilateral trade and investment.