Modi: MSMEs Must Leverage India’s Growing FTAs for Global Reach

Prime Minister Narendra Modi recently called upon Micro, Small, and Medium Enterprises (MSMEs) to fully leverage India’s expanding network of free trade agreements (FTAs). Exporters have received this initiative positively, viewing these pacts as critical for small businesses to access larger international markets.

Understanding the FTA Initiative

During his address on the 80th Independence Day, Prime Minister Modi highlighted India’s successful finalization of FTAs with numerous countries. He specifically encouraged MSMEs to capitalize on these agreements to broaden the international presence of Indian products, including textiles, machinery, and medicines.

• India has finalized FTAs with approximately 40 countries since 2014.

How FTAs Empower MSMEs

FTAs extend beyond simple tariff concessions, serving as vital conduits for MSMEs to integrate into global value chains. These agreements facilitate access to broader markets and significantly boost their competitive edge.

The real potential of these agreements lies in their effective conversion into tangible export orders. This represents both the primary challenge and a significant opportunity for the sector.

Industry Leaders Weigh In

Industry leaders have expressed strong support for the government’s proactive stance. Aqeel Panaruna, former chairman of the Council for Leather Exports (CLE), emphasized that these progressive trade pacts, along with the new foreign trade policy, position India for sustained growth and prosperity.

Panaruna reiterated the industry’s commitment to strengthening Indian manufacturing, fostering large-scale employment, and contributing to the vision of ‘Viksit Bharat’ (Developed India) by 2047. He noted the Prime Minister’s focus has invigorated the industry’s collective resolve.

Ajay Sahai, Director General of the Federation of Indian Export Organisations (FIEO), described the Prime Minister’s call as both timely and significant. FIEO is committed to collaborating with MSMEs to raise awareness about rules of origin, international standards, and market opportunities.

This collaboration aims to enable even smaller enterprises to confidently introduce Indian products and brands to global consumers. The goal is to ensure that preferential market access translates into actual business growth.

MSMEs’ Pivotal Economic Contribution

MSMEs play a crucial role in the Indian economy, acting as the second-largest employer after agriculture. Globally, this sector forms the backbone of business activity and employment.

• MSMEs contribute approximately 35.4% to India’s manufacturing output.
• They account for around 48.58% of the country’s exports.
• The sector contributes 31.1% to India’s Gross Domestic Product (GDP).
• India has over 7.47 crore MSME enterprises.
• These enterprises employ more than 32.82 crore individuals.
• Globally, MSMEs constitute about 90% of all businesses.
• They are responsible for over 50% of total global employment.

By effectively leveraging FTAs, Indian MSMEs can enhance their global footprint. This strategic move is poised to further integrate them into international value chains, reinforcing their contribution to national economic objectives and the ‘Viksit Bharat’ vision.