The European Union (EU) has warned that it will not ink a Free Trade Agreement with India unless it makes substantial commitments on procurements by the Union Government and its various arms.
It wants this commitment on the basis of the Public Procurement Bill (PPB), which promises greater transparency, wider participation and non-discrimination in government procurements.
“The EU has said that Government Procurement is a critical element to the entire package. It has refused India’s suggestion of a text with a provision for future negotiations once the Bill becomes an Act,” a Commerce Department official told
India, however, is reluctant to oblige on the ground that the Bill is yet to be passed by Parliament. “The problem with taking on commitments in a bilateral agreement is that one gets bound by these and it is difficult to change them later. It is very difficult for us to make a commitment on something that is not an Act yet,” explained the official.
The India-EU Broad-based Trade & Investment Agreement, an ambitious pact seeking to liberalise trade in goods and services and relax investment rules, is already in trouble due to the hard stand adopted by both sides on issues such as data security, insurance and professional visas.
India’s Government Procurement business, estimated to be worth $160 billion annually, covers a wide range of sectors, including telecom, railways, energy, roads, industry and health. The Bill proposes to regulate Public Procurement by all Government Ministries, Central public sector enterprises and autonomous and statutory bodies controlled by the Centre.
Once the Bill becomes law, European Union members and other countries could participate in procurements by public sector enterprises that purchase and re-sell material. At present, foreign companies are only allowed to bid for procurement by Central ministries and departments that buy material for self-consumption and not for commercial purposes. The Government also has the right to place restrictions on foreign companies.
The Bill further states that the Chief Procurement Officer will not limit participation of bidders or discriminate against or among bidders except for the protection of public order and morality, and of intellectual and national security.
The EU is determined to get a firm commitment on government procurements by India at this stage. Once passed, it also wants the provisions of the Public Procurement Bill to become an integral part of the Free Trade Agreement.