Overview: India’s expanding network of free trade agreements (FTAs) is creating opportunities for micro, small and medium enterprises (MSMEs). However, access to overseas markets alone will not guarantee export growth. At the CII Global MSME Business Summit, MSME Ministry Secretary Bharat Khera highlighted the need for better quality, competitive pricing and stronger export capabilities. His remarks also drew attention to gaps in product testing and certification that businesses must address to compete internationally.
New trade agreements can give Indian MSMEs better access to overseas markets. However, businesses must still meet buyers’ expectations on quality, pricing and delivery. Speaking at the CII Global MSME Business Summit, MSME Ministry Secretary Bharat Khera stressed that quality and cost competitiveness would be essential for MSMEs to benefit from new Free Trade Agreements (FTAs). His message is particularly relevant to businesses preparing to enter export markets or expand their overseas sales.
How MSMEs can prepare for export growth
The Economic Survey 2025-26 reports that MSMEs contribute 31.1% of India’s gross domestic product (GDP) and 48.58% of the country’s exports. Improving their competitiveness is therefore important for both individual businesses and the wider economy.
Khera identified five priorities – formalisation, access to finance, technology and quality, export competitiveness, and entrepreneurship and enterprise development – to strengthen the sector. Businesses can translate these priorities into practical steps.
- Formalisation and finance: Formalisation and finance: Formal business records are an important part of export readiness. MSMEs can start by completing their Udyam registration and keeping their financial and tax records up to date.
- Quality and technology: Improve production processes, reduce defects and check the standards applicable to the product and destination market.
- Pricing and delivery: Review production costs, packaging, logistics and production capacity before accepting export orders.
- Export documentation: Check product classification, applicable rules of origin and certificate-of-origin requirements before claiming preferential tariff benefits under an FTA.
Product testing and certification need attention
Khera called for stronger testing infrastructure to help Indian businesses meet international standards. He also noted that Bronze-level certifications under the government’s Zero Defect Zero Effect (ZED) scheme had increased, while uptake at the Silver and Gold levels remained low.
A study by the Confederation of Indian Industry (CII) and the Indian School of Business (ISB), cited by The Economic Times, found that 32% of surveyed MSMEs held recognised certification. Among respondents without certification, 30.4% cited a lack of awareness.
These findings relate to the businesses surveyed, not every MSME in India. Certification requirements depend on the product, destination market and buyer. ZED certification is not a universal requirement for exporters.
Export registrations and GST compliance
Businesses should check whether they need an Import Export Code (IEC) before starting export operations.
Eligible exporters can also furnish a Goods and Services Tax (GST) Letter of Undertaking (LUT) to export goods or services without payment of integrated GST (IGST), subject to applicable conditions. The LUT must be furnished for the relevant financial year.
These registrations and tax formalities do not automatically qualify a product for preferential treatment under an FTA. Businesses must separately check the agreement’s tariff provisions, rules of origin and any product-specific testing or certification requirements.
Setindiabiz support
Setindiabiz professionals support businesses with MSME/Udyam registration, IEC registration and updates, GST registration and applicable LUT filing. The team also assists with related documentation and compliance requirements as businesses prepare for export operations. Keeping registrations, tax records and export documents in order helps reduce avoidable delays and allows businesses to focus on production, buyers and growth.
FAQs
No. Preferential tariffs depend on the specific agreement, product classification, rules of origin and required documentation. Export demand and buyer requirements also matter.
No. Requirements depend on the product, destination market and buyer. Businesses should verify the standards that apply to their exports.
Businesses should check IEC requirements, product standards, pricing, delivery capacity, customs documentation and rules of origin. They should also review applicable GST requirements, including LUT filing where relevant.
FTAs can create new export opportunities for Indian MSMEs, but businesses must be ready to meet buyers’ expectations and comply with the rules of their target markets. Better quality, competitive costs and sound documentation can help them turn market access into sustainable export growth.
