Public procurement in India: how European suppliers sell to ministries and the public sector

Short answer: Public procurement in India is built around local content: under the Public Procurement (Preference to Make in India) Order, central buyers class suppliers as Class-I (at least 50% Indian content), Class-II (at least 20%) or non-local, and below INR 200 crore they normally run domestic tenders that non-local suppliers cannot enter [1][2]. A UK supplier with at least 20% UK content is treated as Class-II in tenders covered by the UK–India trade agreement, in force since 15 July 2026, but an EU supplier has no equivalent, because the concluded EU–India agreement has no government-procurement chapter [3][4][5]. For most European suppliers the practical way into Indian government buying is therefore Indian content, through a manufacturing partner, licensee or own assembly that lifts the bid to Class-I, the only class with the right to match a lower price [1].

Who this is for: export directors, bid managers, CFOs and general counsel of UK, French, German and other European equipment, instrument and engineering suppliers weighing Indian government and public-sector tenders.

Government procurement in India: who buys and which rules apply

The Make in India Order binds "procuring entities": central ministries and departments, their attached and subordinate offices, autonomous bodies they control, and government companies such as central public sector enterprises (CPSEs) [6]. The Order does not bind state governments, which have their own procurement rules; it only says they should be encouraged to adopt similar provisions [6]. Defence capital purchases follow the Ministry of Defence's own procedure, covered in the aerospace and defence supply chain in India

Three sets of rules decide whether a European supplier can bid:

1. The General Financial Rules 2017 (GFR), the Department of Expenditure's rulebook. Common-use goods and services listed on the Government e-Marketplace (GeM) must be bought there [7], other central tenders are published on the Central Public Procurement Portal (CPPP, eprocure.gov.in) [8], and no global tender enquiry may be issued for contracts up to INR 200 crore (about EUR 18.7m) without special approval [2].
2. The Make in India Order (DPIIT), which grades suppliers by local content and gives Class-I suppliers a purchase preference, plus item orders issued by individual ministries [1][9].
3. The restriction on bidders from countries sharing a land border with India (Department of Expenditure) [10].

GeM and CPPP. GeM's seller registration asks for an Indian constitution type and, for a company, its Indian PAN, so foreign makers usually sell there through an Indian subsidiary or partner [11]. GeM added a global tender module with multi-currency bidding in March 2026, for use where the GFR allow a global tender [12]. On CPPP, suppliers register and bid online [8].

Make in India local content: Class-I, Class-II and non-local suppliers

Local content is the value added in India: the price of the item, excluding domestic indirect taxes, minus imported content including customs duty, as a percentage [1]. Three things never count as Indian: imported goods bought from an Indian reseller; repackaged or rebranded imports; and licence fees, royalties and technical charges paid out of India [1].

Source: [1].

How the preference works. If the lowest bid (L1) is not Class-I, the lowest Class-I bidder within 20% of it is invited to match L1, then the next. For a non-divisible item the matching bidder takes the whole contract; for divisible goods L1 keeps half [1].

Class-I-only items. Where a ministry has confirmed enough local capacity, only Class-I suppliers may bid, whatever the value. A 2020 Ministry of Power order, for example, lists 17 transmission items, 31 hydro items and 16 groups of thermal equipment on that basis [1][9].

Proof. Bidders self-certify their local content and where the value is added; above INR 10 crore they need a certificate from the statutory or cost auditor [1]. A false declaration can bring debarment for up to two years, and a supplier whose class drops during the contract can be penalised up to 10% of its value [1]. Manufacturers receiving production-linked incentives (PLI) for an item are deemed Class-II for it, for a period set by the ministry running the scheme [1].

Bidders with Chinese or other land-border owners

A bidder from a country sharing a land border with India may bid only once registered, a process run through DPIIT that includes security clearance [10][13]. The test catches subsidiaries and controlled entities of companies from those countries, any company whose beneficial owner is there (for a company, more than 25% of shares, capital or profits, or control), and agents who supply finished goods made by such a company; a European maker that only buys components from China is not an agent [10]. This procurement test is separate from the FDI screening of land-border investors, which has its own threshold. Reuters reported in January 2026 that the finance ministry plans to scrap the registration requirement; we found no published change by 20 October 2026 [14].

UK suppliers: what the UK–India CETA opens, and what it does not

The UK–India Comprehensive Economic and Trade Agreement (CETA) lets India keep the Make in India Order, but India must treat a UK supplier meeting the origin and content conditions as Class-II, with UK value added measured the same way as Indian local content [4]; the UK government puts the threshold at 20% UK content [3][8]. In practice that admits UK bids to domestic tenders below INR 200 crore that would otherwise exclude them. It gives no preference: Class-I bidders can still match a UK L1 within the 20% margin, and UK content cannot make a bid Class-I [8].

Coverage is narrower than "Indian government procurement":

• Entities: 51 central ministries and departments; Defence, Home Affairs, IT and Space are excluded, as are states [8]. Only CPSEs "not exposed to competitive market forces" are covered, listed as about 28 bodies such as the Food Corporation of India and the Dedicated Freight Corridor Corporation [15].
• Values: above SDR 450,000 (about INR 5.5 crore; £480,000) for goods and services, and SDR 5 million (about INR 62 crore; £5.3m) for construction [8][15].
• Carve-outs: preferences for Indian micro and small enterprises stay outside the agreement [15].
• GeM and remedies: India has until 15 July 2027 to bring GeM into line with the chapter's rule that electronic procurement must run on generally available, interoperable systems; bidders get at least 10 days to challenge an award domestically; and the chapter is excluded from state-to-state dispute settlement for four years [4].

The UK estimates about 40,000 covered central tenders a year, worth over £38 billion [8]. The wider agreement is covered in India–UK trade deal (CETA) in force: what UK businesses can use now (ATB Legal).

EU suppliers: no procurement chapter in the EU–India agreement

The EU–India agreement was concluded on 27 January 2026 and sent to the Council for signature in September 2026; it is neither signed nor in force [16]. Its published text has 20 chapters, none on government procurement [5]. Once in force it will cut tariffs (see EU–India trade deal (2026): status, FTA tariffs, rules of origin, CBAM and investment protection, ATB Legal), but an EU-made product with less than 20% Indian content will still be a non-local supplier.

Routes in: UK supplier, EU supplier, or EU supplier with Indian manufacturing

Sources: [1][2][4][8][15].

For an EU supplier, the third column comes in four forms:

• Manufacturing partner or contract manufacturer. The Indian firm bids, or supplies you, with your modules counted as imports. Choosing and checking that firm is covered in finding and checking an Indian partner.
• Licensee. Royalties paid abroad do not count as local content [1]; a ministry may exempt licensed production with technology transfer and a phased local-content plan [1].
• Joint venture. For high-value items a ministry may set a threshold above which foreign companies must bid through a joint venture with an Indian company [1].
• Own assembly or plant. The choice between a wholly owned plant, a joint venture and contract manufacturing is set out in wholly owned, joint venture or contract manufacturing in India; for capital-goods makers it sits inside the wider entry case on industrial machinery in India.

Selling to private Indian companies, where none of this applies, is covered in from pilot to paid contract with Indian companies; the full European picture is in India for European companies.

Worked example (illustrative)

Hypothetical. FX: INR 107 = EUR 1, INR 127 = GBP 1 (rounded exchange rates, October 2026). Prices exclude GST. Content shares and bid prices are our assumptions.

A central ministry covered by the UK deal tenders one non-divisible test system estimated at INR 53.5 crore (EUR 5.0m; GBP 4.21m): above the CETA threshold of about INR 5.5 crore and below INR 200 crore, so a domestic tender [2][15]. The item is not on a Class-I-only list.

The French partner's local content. Partner's price INR 52.0 crore; modules imported from France, duty included, INR 18.0 crore; 5% royalty to the French company, INR 2.6 crore (EUR 0.24m). Local content = (52.0 − 18.0 − 2.6) ÷ 52.0 = 31.4 ÷ 52.0 = 60.4%: Class-I. The bid is above INR 10 crore, so the partner's auditor must certify it [1].

Who wins. L1 is the UK bid at INR 50.0 crore, which is not Class-I, so Class-I bids up to 50.0 × 1.2 = INR 60.0 crore may match. The French partner, the lowest Class-I bid, is asked first: if it matches, it wins the contract at INR 50.0 crore (EUR 4.67m). If it declines, the Indian maker is asked; the UK maker wins only if neither matches [1].

How thin the line is. If the imported modules cost INR 24.0 crore instead: (52.0 − 24.0 − 2.6) ÷ 52.0 = 25.4 ÷ 52.0 = 48.8%, Class-II. The partner can still bid, but loses the right to match, and the UK bid wins unless the Indian maker matches. For a French group, the France–India corridor decision is therefore a sourcing decision: how much of the module to make in India.

Risks and common mistakes, ranked

1. Assuming a global tender. Below INR 200 crore a non-local bid is usually not admissible at all [2].
2. Counting royalties and imported kits as Indian content. Both are deducted, and a certified claim that fails can mean debarment [1].
3. Reading CETA as access to all Indian buyers. Defence, Home Affairs, IT, Space, states and most CPSEs are outside it [8][15].
4. Treating Class-II as a preference. It only gets a bid admitted [1].
5. Missing a land-border owner or a Chinese-made finished product in a bid; registration comes first [10].
6. Waiting for the EU agreement to open tenders: its text contains no procurement chapter [5].

Checklist to forward internally

• Target buyers listed: ministry, CPSE, state; covered or not by CETA (UK entities)
• Each product's local content computed on the Order's formula, royalties and imported modules deducted
• Tender values checked against INR 200 crore and, for UK bids, SDR 450,000
• Ministry item orders checked for Class-I-only lists
• Shareholders above 25% and suppliers of finished goods screened for land-border links
• Route to Class-I chosen: partner, licensee, joint venture or own assembly
• Auditor ready to certify local content for bids above INR 10 crore
• GeM and CPPP registration through the Indian entity

How ATB Corporate can help

ATB Corporate advises companies and investors on entering, structuring and operating in India and the UAE: choosing the entry route and holding structure, tax and exchange-control planning, regulatory compliance, and setting up and running the local business. To discuss your plans, contact ATB Corporate.

FAQ

Can a foreign company take part in public procurement in India?

A foreign company can take part in public procurement in India in global tenders, and in domestic tenders only if its goods or services carry at least 20% Indian content (Class-II or better) or, for covered UK suppliers, 20% UK content [1][4]. Central buyers do not normally issue global tenders below INR 200 crore, so a foreign supplier shipping from abroad is shut out of most contracts unless it localises [2].

What is a Class-I local supplier in India?

A Class-I local supplier in India is a bidder whose goods, services or works have at least 50% local content, meaning value added in India after deducting imported content, customs duty and royalties paid abroad [1]. Only Class-I suppliers can match a lower bid within a 20% margin, and some ministries let only Class-I suppliers bid for listed items [1][9].

What is the threshold for a global tender in India?

The threshold for a global tender in India is INR 200 crore (about EUR 18.7m): under rule 161(iv) of the General Financial Rules, central buyers may not issue a global tender enquiry for contracts up to that value without special approval [2]. Above it, the buyer may issue a global tender, in which non-local suppliers bid alongside Class-I and Class-II suppliers, but Class-I bidders keep their purchase preference [1].

Can European companies sell on GeM, the Government e-Marketplace?

European companies can sell on GeM, the Government e-Marketplace, mainly through an Indian subsidiary or partner, because seller registration asks for an Indian constitution type and, for companies, an Indian PAN [11]. GeM launched a global tender module with multi-currency bidding in March 2026, and under the UK deal India has until 15 July 2027 to bring GeM into line with the procurement chapter's rules on electronic systems [12][4].

Does the EU–India FTA open Indian government procurement to EU companies?

The EU–India FTA does not open Indian government procurement to EU companies: its published text has no government-procurement chapter, and it is not yet signed or in force [5][16]. EU suppliers therefore stay under the Make in India local-content rules, unlike UK suppliers, who are treated as Class-II in covered tenders [4].

Do royalties count as local content under the Make in India order?

Royalties, licence fees and technical charges paid out of India do not count as local content under the Make in India order, which excludes them from the local-content calculation [1]. A licensed Indian manufacturer paying a European licensor must therefore reach 50% local content after deducting both the royalty and any imported kits.

Do bidders with Chinese shareholders need approval to bid in Indian tenders?

Bidders with Chinese shareholders need prior registration to bid in Indian public tenders if a Chinese or other land-border owner holds more than 25% of the company or controls it, and the same applies to agents supplying finished goods made by such companies [10]. Registration runs through DPIIT and includes security clearance; Reuters reported a plan to scrap the requirement in January 2026, but we found no published change by 20 October 2026 [13][14].

Related reading

• Aerospace and defence supply chain in India for European suppliers
• Finding and checking an Indian partner: distributor, system integrator, contract manufacturer or licensee
• India market entry for UK businesses and investors
• India market entry for French companies
• PLI and manufacturing incentives for foreign companies
• India manufacturing entry for foreign companies
• India–UK trade deal (CETA) in force: what UK businesses can use now (ATB Legal)
• EU–India trade deal (2026): status, FTA tariffs, rules of origin, CBAM and investment protection(ATB Legal)

Sources

1. Department for Promotion of Industry and Internal Trade, Public Procurement (Preference to Make in India) Order 2017, revision No. P-45021/2/2017-PP (BE-II)-Part(4)Vol.II, paras 2 (local content and notes), 2A, 3, 3A, 4, 5, 6, 9, 13 and 13A (19 July 2024), as circulated by the Department of Telecommunications — https://www.dot.gov.in/static/uploads/2026/05/2dcea4c9d16dac8330428634a661b440.pdf (accessed 16 October 2026)
2. Department of Expenditure, Consolidated instructions regarding Global Tender Enquiry under rule 161(iv) of the General Financial Rules 2017 (30 June 2021) — https://doe.gov.in/files/circulars_document/Consolidated_instructions_Global_Tender_Enquiry_under_Rule_161_iv_2017.pdf (accessed 16 October 2026)
3. GOV.UK, UK–India CETA chapter 15: government procurement (collection page; updated 15 July 2026) — https://www.gov.uk/government/publications/uk-india-ceta-chapter-15-government-procurement (accessed 16 October 2026)
4. GOV.UK, UK–India CETA Chapter 15: Government Procurement, Arts 15.4(1), 15.4(4) and footnote 2, 15.4(7)–(9), 15.19(3), 15.23 (2025; in force 15 July 2026) — https://assets.publishing.service.gov.uk/media/687fb885f2ecaeb756d0e264/uk-india-ceta-chapter-15-government-procurement.pdf (accessed 20 October 2026)
5. European Commission (DG Trade), EU–India: text of the agreements (20 chapters published after conclusion on 27 January 2026) — https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/countries-and-regions/india/eu-india-agreements/text-agreements_en (accessed 16 October 2026)
6. Department for Promotion of Industry and Internal Trade, Public Procurement (Preference to Make in India) Order 2017, revision No. P-45021/2/2017-PP (BE-II), para 2 ("procuring entity") and para 10(d)(iv) (16 September 2020) — https://www.dpiit.gov.in/static/uploads/2025/07/b0b4d27d65a0fc55c918c693e9f24b2a.pdf (accessed 16 October 2026)
7. Department of Expenditure, Manual for Procurement of Goods, second edition, paras 1.1.2 and 1.10.3 (GeM mandatory under rule 149 of the General Financial Rules) (2024), as published by the Ministry of Education — https://dsel.education.gov.in/sites/default/files/miscellaneous/REVISED_Manual_Procurement_Goods.pdf (accessed 16 October 2026)
8. Department for Business and Trade, Government procurement opportunities in India (2026) — https://www.business.gov.uk/export-from-uk/markets/india/trade-agreement/government-procurement-opportunities-in-india/ (accessed 16 October 2026)
9. Ministry of Power, Order No. 11/05/2018-Coord., Public Procurement (Preference to Make in India): purchase preference linked with local content in the power sector, para 3 and Annexure-I (28 July 2020) — https://powermin.gov.in/sites/default/files/Public_Procurent_Preference_to_Make_in_India_to_provide_Purchase_Preference.pdf (accessed 16 October 2026)
10. Department of Expenditure, Order (Public Procurement No. 4), F.No.7/10/2021-PPD(1), paras 2, 3, 6, 12–14, 17 and 20 (23 February 2023), as circulated by the Employees' Provident Fund Organisation — https://www.epfindia.gov.in/site_docs/PDFs/Circulars/Y2022-2023/IFD_circular_06032023_old.pdf (accessed 16 October 2026)
11. Government e-Marketplace, Seller FAQs (registration: constitution type, organisation PAN, GSTIN, country of origin) — https://gem.gov.in/userFaqs/seller (accessed 16 October 2026)
12. Government e-Marketplace, letter of the Chief Executive Officer to Secretaries of all Ministries and Departments, DO No. 68/CEO-GeM/2026, on the Rate Contract and Global Tender Enquiry functionalities (10 March 2026), as published by CSIR — https://www.csir.res.in/sites/default/files/2026-03/do_no.68_letter.pdf (accessed 16 October 2026)
13. Department for Promotion of Industry and Internal Trade, Office Memorandum No. P-45021/112/2020-PP(BE-II)(E-43780), format for registration of bidders from countries which share a land border with India, with Appendix B (security clearance) (24 August 2020), on the Central Public Procurement Portal — https://eprocure.gov.in/cppp/instructionsdisp/kbadqkdlcswfjdelrquehwuxcfmijmuixngudufgbuubgubfugbububjxcgfvsbdihbgfGhdfgFHytyhRtNjc= (accessed 16 October 2026)
14. Reuters, "India plans to scrap curbs on Chinese firms bidding for government contracts" (8 January 2026), as republished by Yahoo Finance — https://finance.yahoo.com/news/exclusive-india-plans-scrap-curbs-085309541.html (accessed 16 October 2026)
15. GOV.UK, UK–India CETA Annex 15A.i: Government Procurement Schedules, Schedule of India, Section A (thresholds; Note 2 on CPSEs) and General Notes 1(a)–(b) (2025; in force 15 July 2026) — https://assets.publishing.service.gov.uk/media/687fb8c8f2ecaeb756d0e265/uk-india-ceta-annex-15ai-government-procurement-schedules-schedule-of-india.pdf (accessed 16 October 2026)
16. European Commission, EU–India trade agreement (status and next steps; updated 11 September 2026) — https://commission.europa.eu/topics/trade/eu-india-trade-agreement_en (accessed 16 October 2026)

Disclaimer: This article is general information, not legal or tax advice; the worked example is hypothetical, and Indian procurement orders and trade-agreement coverage change, so check the current rules and the tender document before bidding.