PM Modi: MSMEs Should Use FTAs for Global Market Access

Prime Minister Narendra Modi has urged Micro, Small, and Medium Enterprises (MSMEs) to fully leverage India’s expanding network of Free Trade Agreements (FTAs). This initiative aims to provide MSMEs with greater access to global markets and enhance their competitiveness on an international scale.

Exporters view this as a timely opportunity, though the primary challenge remains converting these agreements into tangible export orders. Since 2014, India has successfully finalized FTAs with approximately 40 countries, expanding its trade horizons significantly.

Understanding the FTA Advantage for MSMEs

FTAs extend beyond simple tariff concessions, serving as critical tools for MSMEs to integrate into global value chains. These agreements facilitate smoother trade flows by reducing or eliminating import duties between signatory partners.

• Access Global Markets: Opens new avenues for Indian products.
• Integrate Value Chains: Allows MSMEs to become part of larger international production networks.
• Boost Competitiveness: Helps Indian businesses compete more effectively on price and quality.

Ajay Sahai, Director General of the Federation of Indian Export Organisations (FIEO), emphasized that FTAs are crucial for MSMEs to enhance their global competitiveness. FIEO plans to educate MSMEs on essential aspects like rules of origin, standards, and specific market opportunities.

India’s Expanding Global Trade Footprint

India has been proactive in establishing trade pacts to strengthen its economic ties worldwide. The government’s push aligns with a broader strategy to expand the global reach of Indian products, including textiles, machinery, and medicines.

• Recent Implementations: Agreements with the UAE, Mauritius, Australia, the UK, the EFTA bloc, and Oman.
• Finalized Pacts: Agreements with the EU and New Zealand have also been finalized.

MSMEs: A Cornerstone of India’s Economy

MSMEs are a vital engine for India’s economic growth and employment. Their contribution is significant across various sectors, making them the second-largest employer after agriculture in the country.

• Manufacturing Contribution: Accounts for about 35.4% of total manufacturing.
• Export Share: Represents 48.58% of India’s total exports.
• GDP Contribution: Contributes 31.1% to the nation’s Gross Domestic Product.
• Employment: Employs over 32.82 crore people.
• Enterprises: Comprises 7.47 crore enterprises nationwide.

Globally, MSMEs constitute approximately 90% of all businesses and provide over 50% of global employment. Aqeel Panaruna, former chairman of the Council for Leather Exports (CLE), welcomed the government’s initiative, noting India’s strong position for sustained growth.

This strategic focus on empowering MSMEs through FTAs is integral to India’s commitment to achieving “Viksit Bharat by 2047,” aiming for strengthened manufacturing, increased employment generation, and enhanced global competitiveness.