India is reportedly planning to open parts of its massive $700+ billion public procurement market to foreign companies, starting with the U.K. and the U.S. This marks a big policy shift. The government claims it’s a reciprocal move, that we open our market, and they open theirs. But in reality, this could seriously harm India’s small and medium enterprises (MSMEs), which depend heavily on government contracts to survive.
Right now, only central government contracts are being opened up. But even this limited step raises concerns. Is India doing this to rethink its trade strategy? Or is it just giving in to pressure from powerful countries like the U.S., especially as we still deal with the legacy of Trump-era trade threats and tariff hikes?
India has always resisted joining the WTO’s Government Procurement Agreement, mainly to protect its MSME sector. Diluting this protection could push our small businesses into unfair competition with large foreign firms. We must ask: Who benefits from this? India’s trade decisions should support local industries and build economic strength from within, not weaken our backbone for the sake of pleasing other nations.
At the same time, the Reserve Bank of India (RBI) has highlighted the fragile state of the global economy. In its recent bulletin, the RBI pointed out how trade wars, climate-related issues, and falling demand are causing massive swings in commodity prices. It also warned that financial markets are unstable due to the growing uncertainty around global trade. In fact, the drop in global exports this April was the worst since 2012, not counting the pandemic years.
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Team CFA