India’s digital ambitions are soaring, from building digital public infrastructure to digitizing several government processes and administrative functions. Across some of our high-profile e-governance projects, such as the GST Network and the MCA21 company filing system, which involve specific technology platforms, the result is the same: delays & cost overruns, duplicate systems, multiple vendors, and piling technical debt. The problem is not a lack of ambition or talent. The real obstacle is our outdated procurement rules that treat technology the same way as cement and steel.
The Procurement Trap
The first and most fundamental issue is policy fragmentation. At the horizontal level, India’s procurement framework remains scattered across the General Financial Rules (GFR) 2017 and a patchwork of manuals designed for physical goods rather than dynamic digital systems.
Technology procurement cuts across goods, works, and consultancy rules. Departments rely on myriad guidelines from the Ministry of Electronics and Information Technology (MeitY), CERT-In, Cloud advisory, Make-in-India order, and STQC (Standardization Testing and Quality Certification). Most are advisory, outdated, or unenforced. Without a unified framework, duplication and irregularity are inevitable outcomes rather than exceptions.
Vertical fragmentation exacerbates this problem. Multiple institutions, often working in silos, simultaneously build and procure IT systems. MeitY’s agencies, such as NIC, NeGD, C-DAC, and BISAG-N, operate alongside sector-specific units like CRIS for Railways or the Centre for Health Informatics in Health. Each has a valid remit and a record of successes. However, without a mandatory “reuse first” policy, these agencies often procure or develop parallel platforms instead of shared modules, leading to wasted resources and disjointed citizen services.
The second issue is India’s obsession with the L1 system, where contracts are awarded to the lowest bidder. While the GFR rightly emphasizes transparency and competition, it has long equated best value with lowest cost. This mindset undermines quality and innovation, both critical for complex technology projects.
The Economic Survey in 2020-21 itself acknowledged that the lowest-cost tenders are ill-suited for “high impact and technologically complex procurements.” Although the Finance Ministry has recently introduced Quality-cum-Cost Based Selection (QCBS) for non-consultancy services, allowing technical merit to carry some weight, the reform is too limited. It applies only to projects under ₹10 crore and requires special approval. In practice, the culture of L1 still dominates nearly all technology bids, often producing fragile systems that fail under real-world demands.
The third issue here is that rigidity kills innovation. Technology projects demand agile, iterative approaches. Yet current contracts lock in rigid specifications, making any change a bureaucratic nightmare. By the time many systems are delivered, they are already obsolete. Maintenance is treated as an afterthought, which causes platforms to age poorly. With officers often trained in physical procurement, evaluating cloud architectures or AI solutions becomes daunting.
Breaking the Logjam
Fixing this requires a decisive shift in how the government procures technology. Firstly, India must move beyond fragmented manuals and create a unified Digital Procurement Policy that combines all IT-related directives, model RFP documents, open-source use, and cybersecurity requirements.
This policy should include several pathways, such as off-the-shelf, subscriptions, co-developing, and support/maintenance. As India also aspires to use AI for government, the policy should evolve with specific aspects of artificial intelligence, such as model evaluation, benchmarks, AI incidents, training data, etc.
A unified policy would provide departments with clarity, reduce duplication, and allow contracts to be designed with agility and innovation at their core.
Secondly, India could learn from global innovations in digital procurement by expanding the Government e-Marketplace (GeM) into a true digital marketplace for technology, inspired by the UK’s upcoming National Digital Exchange (NDX). The NDX is not just another procurement portal; it is being built as an AI-powered hub where governments can secure pre-approved technology solutions at negotiated prices within hours, not months.
Combining speed with transparency through user reviews and vendor ratings, the UK expects to save over £1.2 billion annually and open the door for far greater participation from small and innovative firms. Australia’s BuyICT portal, meanwhile, offers a successful model of unbundling contracts and limiting vendor lock-ins to enhance flexibility and cost-effectiveness.
Third, openness must be non-negotiable. Every digital procurement contract should mandate open standards for data and interoperability, with source code and intellectual property resting with the government. Moreover, aligning with the India Enterprise Architecture (IndEA) would prevent vendor lock-ins and ensure critical systems remain under sovereign control.
Finally, procurement reforms must invest in people and oversight. A dedicated team of procurement professionals with IT expertise, trained via iGOT or similar platforms, is essential. Interim quality reviews at project milestones should be standard to ensure accountability and prevent projects from failing silently.
India’s digital transformation is at risk of being throttled by archaic procurement systems. If we modernize how we buy technology by embracing openness, agility, marketplaces, and skilled procurement professionals, we can turn procurement from the government’s biggest bottleneck into its biggest enabler.
How we procure our technology would decide whether Digital India becomes a global benchmark or a cautionary tale. The government must act decisively now, because in the digital era, how we buy is as important as what we build.
Mitul Jhaveri is a graduate scholar at Carnegie Mellon University. Aatman Shah, a chartered accountant and public policy professional, recently graduated from the Lee Kuan Yew School of Public Policy.
