Indian Economy News

India’s FTAs give MSMEs a shot at bigger global markets

India’s expanding network of Free Trade Agreements (FTAs) is creating new opportunities for micro, small and medium enterprises (MSMEs) to access larger international markets, improve price competitiveness and become more integrated into global value chains. Recent trade agreements with partners including the UK, European Union, Australia and New Zealand are expected to provide Indian exporters with improved market access and lower tariff barriers. Exporters across labour-intensive sectors such as textiles, leather, footwear, engineering goods, processed food, chemicals, handicrafts and gems and jewellery stand to benefit from preferential access. The wider FTA push reflects a shift towards strengthening India’s export competitiveness by enabling domestic businesses to compete more effectively with suppliers from countries that already enjoy preferential market access. Recent trade data also indicate growing exports to several FTA partners, with shipments to Singapore and Sri Lanka more than doubling in Q1 FY2026-27.

For MSMEs, the benefits of FTAs extend beyond tariff reductions and include opportunities to expand exports, enter new markets, strengthen production capabilities and participate in international supply chains. Better access to developed markets can also encourage businesses to improve product quality, technology adoption, certification and compliance with international standards. The agreements are particularly significant for sectors where MSMEs form a large part of the supplier base and where lower tariffs can improve competitiveness against exporters from countries such as Bangladesh and Vietnam. India’s broader trade strategy is increasingly focused on using FTAs to diversify export destinations, strengthen manufacturing and connect domestic enterprises with global buyers. Industry bodies are also conducting outreach programmes to help MSMEs understand preferential tariff structures, rules of origin and compliance requirements under various FTAs.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.