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EU FTA negotiations with India: The question of liberalisation of public procurement

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Abstract

The proposed bilateral free trade agreement (FTA) between India and the European Union has thrown up many contentious issues among which public procurement is an important one. While India is reluctant to include public procurement in FTA, the European Union (EU) has been insisting that FTA without liberalisation of public procurement is not on the negotiating table. What makes India particularly attractive to the EU is not only the size of its public procurement market but also its rapidly growing economy and demand for infrastructure which presents EU firms with an opportunity to gain market access into this sector under the FTA setting. The EU is insisting on national treatment and non-discrimination as also transparency in Indian procurement system. Indian companies aspire to crack open public procurement market in the EU by entering it through the services sector. However, they are finding EU procedures for ‘data adequacy’ and policies relating to work visa difficult. India’s reluctance to negotiate government procurement under the FTA framework is also attributed partly to administrative costs required for making changes to existing framework and for establishing institutions to implement bilateral obligations. Though several deadlines have been missed, an agreement that could bring mutual benefit for both the EU and India is not out of reach.

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Notes

  1. Owing to the absence of specific published data on public procurement, estimates made by different organisations and experts place the expenditure on public procurements in the range of 20 to 30 % of GDP (Sen and Singh 2012). OECD (2012) estimates that it is expected to grow by more than 10 % annually in the coming years.

  2. Members are the EU and EFTA member States, Armenia, Aruba, Canada, Hong Kong, Iceland, Israel, Japan, Korea, Singapore, Taipei and the USA.

  3. These countries are Albania, China, Georgia, Jordan, Kyrgyz Republic, Moldova, New Zealand, Oman, Panama and Ukraine.

  4. Correlation coefficient between the Score assigned by Transparency International (2012a) and GDP per capita in PPP$ as reported in World Bank’s (2013) World Development Indicators is 0.8 (author’s calculation).

  5. Recently, Silvio Berlusconi who has been Prime Minister of Italy, three times defended Giuseppe Orsi, head of the state-controlled Finmeccanica defence group who was accused of involvement in bribes paid to Indian government officials to secure a helicopter contract on the grounds that “bribes are a phenomenon that exists and it’s useless to deny the existence of these necessary situations when you are negotiating with third world countries and regimes,” (Financial Times 2013).

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Correspondence to Anand N. Asthana.

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Khorana, S., Asthana, A.N. EU FTA negotiations with India: The question of liberalisation of public procurement. Asia Eur J 12, 251–263 (2014). https://doi.org/10.1007/s10308-014-0369-7

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