In a potential policy shift that could significantly alter the Indian infrastructure sector, reports suggest that the Government of India is considering allowing foreign companies, including those from the United States, to bid for large-scale government contracts. While the decision has not yet been officially confirmed, information sourced from ongoing discussions and trade reports points to this possible move as part of broader trade negotiations.
Currently, infrastructure contracts in India are largely dominated by domestic companies. More than 90% of such government projects are awarded to Indian firms. However, if the new policy comes into effect, it could open the door for foreign participation in these lucrative projects for the first time in a structured and phased manner.
The change, as reported, would be implemented gradually. For instance, foreign firms may initially be allowed to bid for only a small percentage of contracts—perhaps starting at 10%, then increasing to 15%, and eventually to 20% or more, based on reciprocal agreements with other nations. This phased approach would ensure a controlled transition and mitigate the immediate impact on domestic companies.
The policy discussions are reportedly linked to ongoing trade talks between India and the United States. If enacted, it would allow foreign infrastructure firms to participate in Indian government tenders worth billions of dollars. Contracts valued above $50 billion are said to be the focus of this policy shift, as per preliminary reports.
One key concern arising from this development is the impact on small businesses. Traditionally, the Indian government reserves 25% of its infrastructure contracts for small enterprises to ensure their growth and sustainability. According to current reports, this reservation will remain intact, with the government assuring that the quarter of orders reserved for small businesses will not be affected by the new policy.
This proposed liberalization is expected to increase competition significantly for major Indian infrastructure firms, which have so far enjoyed a relatively protected environment. Companies like Larsen & Toubro (L&T), Adani Enterprises, Shapoorji Pallonji (Afcons Infrastructure), JSW Infrastructure, GMR Group, and IRB Infrastructure Developers are likely to face heightened competition from well-resourced foreign players. These companies are currently engaged in large-scale projects ranging from ports, highways, airports, and metro systems to real estate and energy infrastructure.
Smaller but important firms such as NCC, HCC (Hindustan Construction Company), Canar Construction, NBCC (National Buildings Construction Corporation), PNC Infratech, Ashoka Buildcon, HG Infra, RBNL, and Ircon International may also experience competitive pressures, particularly in areas where foreign firms have technological advantages or cost efficiencies.
The report also indicates that this policy shift may create new opportunities for Indian companies to access infrastructure projects in foreign countries, potentially as part of reciprocal arrangements. While developed countries may already have mature infrastructure networks, this policy could still provide Indian firms with global exposure and partnerships.
The proposed move mirrors developments seen in other countries like the UK, where partial access to government contracts has already been granted to foreign firms under existing trade deals. The Indian government is currently assessing the implications of this strategy, and it remains to be seen whether it will finalize and implement these changes.
Disclaimer:
The information presented in this article is based on media reports and unofficial sources. The policy discussed is not yet confirmed by the Indian government and may be subject to change. Readers are advised to verify facts and consult official announcements before making any investment or business decisions. The article is for informational purposes only and does not constitute financial, legal, or investment advice.
