Draft Procurement Act 2023 (Specified International Agreements and Saving Provision) (Amendment) Regulations 2026
(1 day, 9 hours ago)
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The Parliamentary Secretary, Cabinet Office (Chris Ward)
I beg to move,
That the Committee has considered the draft Procurement Act 2023 (Specified International Agreements and Saving Provision) (Amendment) Regulations 2026.
It is a pleasure, as always, to serve under your chairmanship, Sir Desmond. The purpose of this statutory instrument is to implement the procurement chapter of the UK-India comprehensive economic and trade agreement via an amendment to the Procurement Act 2023.
The UK-India CETA was signed on 24 July 2025. It is one of the most significant and ambitious bilateral trade agreements that the UK has concluded since leaving the EU. India is of course one of the economic heavyweights of the 21st century and is likely to become the third largest global economy by the end of this decade. Our trade with India is already worth £47 billion a year, up 15% year on year, and it is of course a market with huge and growing demand for imports, presenting major opportunities for British businesses and procurement.
However, India’s markets are also behind some of the highest trade barriers in the world, locking out many British businesses. The deal we have secured knocks down many of those barriers and goes well beyond India’s agreements with other countries. Indeed, it opens the door for British businesses on an unprecedented basis, especially in respect of Government procurement.
The procurement chapter will unlock around £38 billion a year of contracts in sectors such as advanced manufacturing, healthcare, construction, infrastructure and clean energy. For the first time, UK companies will be able to compete for those contracts. Alongside that, we are gaining access to India’s procurement portal, providing a line of sight for British businesses on a huge and growing market. Under the terms of the agreement, British businesses will have access to procurements above £478,000 for goods and services, and £5.3 million for construction services.
We have also gained exclusive treatment for UK bidders to be treated as class 2 suppliers under the Make in India policy. This will apply if at least 20% of the product or service is from the UK or India. That will give British companies a significant competitive advantage, as it goes beyond anything negotiated by others. We have also achieved commitments on fairness, openness and transparency, including the use and accessibility of e-procurement systems, and we have agreed requirements for the publishing of notices and awards of contracts and domestic review procedures for businesses to challenge should the chapter’s rules not be followed correctly.
Our agreement is also significantly stronger than the political agreement the EU has now reached with India. In particular, we have negotiated unique access to India’s £38 billion federal procurement market, something the EU has not obtained. The EU also does not have any agreement relating to class 2 status under the Make in India policy.
Those are the benefits of the agreement legislated for in the regulations; I will turn briefly to the process for introducing them. As Committee members will know, the regulations were laid on 19 January in order to bring the trade agreement into force as quickly as possible while allowing for parliamentary scrutiny under the proper process. They will update schedule 9 to the Procurement Act 2023, implementing in domestic law the UK’s procurement obligations in the agreement. Suppliers entitled to benefit from it will be considered “treaty state suppliers” under section 89 of the Act, which will provide them with equal access and rights in UK public procurement as are afforded to UK suppliers. In turn, the agreement requires India to provide comparable access to UK suppliers.
The Procurement Act 2023 (Commencement No. 3 and Transitional and Saving Provisions) Regulations 2024 are also being amended to ensure that the UK’s obligations under the agreement apply in relation to contracts that can still be entered into under the previous procurement regime.
The territorial application of these regulations in relation to contracts under the 2023 Act extends to England and Northern Ireland. It also extends to Scotland and Wales, but not in respect of procurement carried out by a devolved Scottish authority or regulated by the Welsh Ministers. The Welsh Government, with whom we have been in discussion, are making a separate SI to implement this agreement. It was laid in the Senedd on 10 February and is scheduled for debate on 10 March and due to enter into force on 31 March, the day after these regulations.
The Scottish Government are implementing the agreement separately under their own legislation, which was laid before the Scottish Parliament on 7 January and considered by the Economy and Fair Work Committee on 4 February. The Scottish Parliament approved the SI on 18 February, and it will enter into force on 24 March. The territorial application of this SI in relation to contracts under the previous procurement regime extends to England, Wales and Northern Ireland.
The procurement chapter unlocks unprecedented access to India’s federal procurement market. It covers access to approximately 40,000 tenders per year worth at least £38 billion per annum. It is good news for British businesses and our economy, and I hope hon. Members will join me in supporting these regulations.
Mike Wood (Kingswinford and South Staffordshire) (Con)
It is a pleasure to serve under your chairmanship again, Sir Desmond. The Minister will be aware that we have some concerns about part of the UK-India agreement, but those concerns do not apply to the provisions on public procurement, and as such we support the measures in the regulations.
In effect, the regulations add the UK-India agreement to schedule 9 to the Procurement Act 2023 introduced by the previous Government. That will mean that suppliers from India that fall within the scope of the agreement will be entitled to participate in relevant UK public procurement processes on the same basis as UK suppliers.
We are proud of many of the changes brought in by the last Government through the Procurement Act to boost the UK economy, including the move from the EU’s most economically advantageous tender system to our own, broader, most advantageous tender system. That subtle change of language has massive real-world implications. It lets contracts reflect real value and not just price. Instead of the rigid focus on the lowest price under the previous EU-derived rules, under our new procurement framework we can consider value more holistically, including social and local benefit; instead of restrictive procedures, there is more competitive flexibility, so that buyers can design the process; and instead of it being difficult to exclude bad actors, as was the case under the previous system, robust powers are in place to debar suppliers on national security grounds. I am sure that the Minister will confirm that those powers will still apply under the regulations.
Importantly, buyers can now give significant weight to bids that create jobs in their specific region or the sector for which they are responsible, and for the first time, public bodies are publishing key performance indicators for major contracts. If a supplier fails to deliver for the public, it can be held to account and potentially barred from future work. Given those positive changes, it makes sense to apply the new system to procurement covered by the UK-India trade agreement.
Of course, due to the transitional provisions currently in place, some procurements continue to be governed by earlier legislative frameworks, including the Public Contracts Regulations 2015 and the Utilities Contracts Regulations 2016. That is one of the reasons why we agree that the regulations before us, which will ensure that the procurement chapter of the UK-India agreement can also apply to procurements still conducted under those earlier regimes, are necessary.
In practice, that means that economic operators benefiting from the agreement will be entitled to the same treatment as UK suppliers in procurements carried out under framework agreements, dynamic purchasing systems or qualification systems that remain subject to the previous rules. The amendments will apply only to procurements commenced after the UK-India agreement enters into force; procurements already under way will not be affected.
The Government have indicated that a full impact assessment has not been produced on the basis that the regulations are not expected to have a significant impact on the private, voluntary or public sectors. Given the scale of public procurement in the United Kingdom, it would be helpful if the Minister provided some clarity on a few points.
First, what assessment has been made of the value of procurement opportunities in the UK that will now be accessible to Indian suppliers under the agreement? On the flip side, can the Minister further lay out what reciprocal access UK businesses will gain to public procurement markets in India, and what practical support will be available to help UK firms, particularly small and medium-sized enterprises, to take advantage of those opportunities? Thirdly, could he clarify the expected timetable for the agreement to enter into force and, therefore, for these provisions to begin applying in practice?
The regulations are, in many respects, technical in nature, but they form part of the broader implementation of the UK-India trade agreement and therefore could have significant implications for access to public procurement markets, both here in the UK and abroad, so it is right that the Committee carefully scrutinises how they will operate in practice. I look forward to the Minister’s response.
Lisa Smart (Hazel Grove) (LD)
It is a pleasure to have you in the Chair this evening, Sir Desmond. While the Liberal Democrats welcome the overarching free trade agreement and are in favour of opening up trade in the face of Trump’s trade wars, we believe that the agreement between the UK and India could have gone further in a number of areas, in particular with respect to services.
During a speech in a debate on the free trade agreement, my hon. Friend the Member for Witney (Charlie Maynard) argued that its economic benefit is small—only 0.13% of GDP by 2040—compared with the estimated economic impact of Brexit, which some say is 6% to 8% of GDP. As much as some of us might enjoy it, I do not propose to relitigate our leaving the European Union via the First Delegated Legislation Committee this evening, but my hon. Friend made the point that the EU secured better tariff access to India—96.6% compared with the UK’s 92%—which suggests that larger trading blocs have greater negotiating power.
Importantly, my hon. Friend raised concerns that India exports petrochemicals refined from Russian oil to the UK, exploiting a sanctions loophole. The EU has already closed that loophole, but the UK has not yet done so. Could the Minister provide an update on that situation and, if the loophole permitting the export of Russian-derived products remains in place, say when it will be closed?
Chris Ward
I am grateful for the spirit in which the debate has been carried out.
The hon. Member for Kingswinford and South Staffordshire rightly mentioned that the regulations build on the Procurement Act passed under the last Government. That is a good thing, although we will set out plans shortly to improve it. He is quite right that nothing in the regulations affects the national security powers, and that the regulations tidy up contracts completed prior to the Procurement Act—that is why they are important.
On business engagement and impact assessment, this is really about getting a foot in the door of the Indian market for UK businesses, and it is very hard to model the impact of that at this stage. It is a large and growing market, with huge demand for imports. Until we gain access, as we have done, to the procurement portal and are established in the market, it is hard to know the exact material economic benefits, but obviously we hope that this will be a first step in that. As I say, it is a foot in the door that is greatly welcomed. I should point out that the Department for Business and Trade is working incredibly hard on business engagement in India. We have a team on the ground there to try to maximise this and capitalise on it as much as possible, and they are working really closely with British businesses to make sure that they can do that.
In terms of application, the regulations come into force on 30 March. The Constitutional Reform and Governance Act 2010 process has been completed on the broader trade deal, so this will align with that. As I said, our aim is for the agreement to come in as quickly as possible.
On the point raised by the hon. Member for Hazel Grove about services and the ambitious nature of the deal, we estimate that the agreement is worth around £5 billion a year to the UK economy. For an individual trade deal, that is very significant; as I say, it is more ambitious than a lot of the deals that have already been completed, and it is the first type of deal like this that the Indian Government have agreed.
While none of us is in the mood to relitigate Brexit, or talk through that too much, I will make two minor points. First, Britain has negotiated a stronger deal than the EU. As I said, the EU has not gained the same arrangements around the Make in India policy and treatment of suppliers as class 2, and it has not gained access to the procurement portal in the same way that we have, so our deal is materially better. Secondly, I gently say that if the Liberal Democrats want to enter a new customs union, they should know that any free trade deal that we did on that basis would not be an independent free trade deal; it would be a trade deal agreed by the EU, and it would be on qualitatively inferior terms, because the EU has just negotiated its deal and ours is stronger. There is a consequence to the position that the Liberal Democrats take. I hope that helps; if there are points that I have missed, I will write with further detail.
In conclusion, this agreement is a major milestone in our relationship with India, a vast and growing economy that we hope British businesses can contribute to as much as possible. Implementation of the procurement deal is a big step forward for us, and I hope colleagues will join me in approving the regulations.
Question put and agreed to.