WTO Agreement on Global Procurement

Agreement on Government Procurement UPSC: Relevance

• GS 2: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.

WTO Agreement on Global Procurement: Context

• Recently, the Ministry of Commerce and Industry has informed that India has no plans to join the Government Procurement Agreement of the World Trade Organization (WTO).

Government Procurement Agreement : Key points

• The India-UAE FTA agreement, which came into effect on 1 May excludes government procurement for several union ministries.
• This was the first time India had included government procurement in a free-trade pact, however, it is only limited to a few central ministries.
• It excludes key sectors such as construction, infrastructure projects and health care, including medical devices and pharmaceutical products.
• Under the India UAE pact, only government procurement contracts worth over ₹200 crore will be allowed for UAE-based companies on the same terms as Indian firms.
• Moreover, Government procurement is open to 34 ministries and departments, including power and education.

Agreement on government procurement (GPA)

• What is GPA: The GPA is a plurilateral agreement within the framework of the WTO, meaning that not all WTO members are parties to the Agreement.
• The fundamental aim of the GPA is to mutually open government procurement markets among its parties.
• As a binding international treaty, the GPA is administered by the Committee on Government Procurement which is composed of representatives of all its parties.

WTO government procurement India

• India is an observer under WTO Agreement on government procurement since 2010.
• 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.

Should India join GPA?

Yes because

• International market access: It would help India in promoting and reinforcing good governance practice as well as contributing to the effective management of the public resource and promoting convergence in international procurement systems.
• Minimization of inefficiency: Since GPA promotes competition through transparency, it could do away with the inefficiencies like lack of effective competition in bidding markets; and concerns regarding corruption or lack of good governance.
• Good governance: GPA includes transparency rules and provisions on domestic review to good governance and anti-corruption efforts in order to avoid conflicts of interest and prevents corruption practices.

No because

• Higher cost: Low development of India’s procurement system could imply higher costs for bringing institutional reforms to make it GPA-compliant.
• GPA requirements: Implementing GPA’s requirements regarding the transparency of procurement procedures, the implementation of an independent domestic review system, would mean a big change in the internal government structure through the implementation of reforms to its national legislation and procurement policies.

Government Procurement Agreement : Way forward

• Accession to GPA involves many advantages. Nevertheless, it is important to take into consideration the present structure and procurement policies before joining any such groupings.

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