Are you curious about public procurement from around the world? What does it look like? How does it differ from Australia and New Zealand? Gary Mander, Senior Manager of Supply Chain & Operations, Public Procurement Advisory at EY, dives right in with this global series. This week, he’s exploring India. Where will he visit next? Clue: It’s very green. Some may say Emerald…
Scale of public procurement in India
India’s public procurement market is one of the largest in the world, accounting for an estimated 15-20 percent of GDP or approximately $500-600 billion annually.
This includes procurement by central and state governments, public sector undertakings (PSUs) and autonomous bodies.
Legal framework
India operates under a pluralistic procurement regime, without a single unified procurement law. Instead, it relies on a combination of central rules, manuals and state-specific legislation.
Key instruments
General Financial Rules (GFR), 2017 – Core financial and procurement rules for all central government entities
Manuals for Procurement – Issued by the Ministry of Finance for Goods, Works and Consultancy
Public Procurement (Preference to Make in India) Order, 2017 – Promotes domestic manufacturing and local content
State-specific acts – e.g. Tamil Nadu Transparency in Tenders Act
Core principles
Indian public procurement is guided by the principles of:
- Transparency
- Fairness
- Value for money
- Competition
- Accountability
Recent years have seen a growing emphasis on:
- ‘Make in India’: Preference for domestically produced goods
- Sustainability: Green procurement and energy-efficient products
Procurement procedures
India primarily uses three procurement methods:
1. Open Tendering – Default method; publicly advertised and open to all eligible bidders
2. Limited Tendering – Used when a shortlist of vendors is invited directly; bids from others are not accepted
3. Single Source Procurement – Used in exceptional cases (e.g. emergencies, proprietary items)
Procurement thresholds
Procurement thresholds vary depending on the nature of goods/services and the ministry/department.
The Government e-Marketplace (GeM) has the following thresholds for standard and straightforward Goods and Services requirements.
- Below Rs. 0.5 lakh ($968), a direct award can be made to a single registered supplier
- Between Rs. 0.5 lakh and Rs. 10 lakh ($968 and $19,370), three quotations are obtained and the contract is awarded on the basis of lowest price
- Above Rs. 10 lakh ($19,370), a tender process is conducted (or reverse auction) and the contract is awarded on the basis of lowest price
For more complex requirements, the following thresholds are used:
- Limited Tender Enquiry – Between Rs. 2.5 lakh and Rs. 25 lakh ($4,842 and $48,425)
- Open Tender Enquiry – Above Rs. 25 lakh ($48,425)
Reciprocal access & global tenders
India is not a signatory to the WTO Government Procurement Agreement (GPA). However, it has bilateral trade agreements that may include procurement access (e.g. with Japan, South Korea and under negotiation with the UK).
India also uses a Global Tender Enquiry (GTE) mechanism to invite international suppliers when:
- The requirement cannot be met domestically, or
- The estimated value exceeds ₹200 crore (approx. $38 million), unless exempted
Follow Gary Mander for more global procurement insights, and stay tuned to the Insider for next week’s destination.
