The Indian government will now cover all certification costs for micro and small enterprises to help them comply with strict European Union standards. This initiative aims to remove financial hurdles for exporters struggling with requirements like CBAM and EUDR. The move comes as merchandise exports to the EU fell to USD 72.4 billion in the 2025-26 fiscal year, highlighting the need to reduce non-tariff barriers.
The Indian government has launched a significant support initiative to help micro and small enterprises tackle the rising costs of international trade. Commerce and Industry Minister Piyush Goyal announced that the state will now provide full funding for certification costs that smaller exporters often struggle to pay. These costs typically arise from meeting strict international mandates, such as the European Union’s Carbon Border Adjustment Mechanism (CBAM) and the EU Deforestation Regulation (EUDR).
These EU regulations act as non-tariff barriers, requiring businesses to undergo expensive testing, inspection, and certification processes to prove their goods meet sustainability and environmental standards. For many smaller Indian exporters, these compliance fees can be high enough to hurt profit margins or make them uncompetitive against global players.
This new support comes under the Export Promotion Mission, a multi-year program backed by an outlay of Rs 25,060 crore. The initiative, managed through the Trade Regulations, Accreditation and Compliance Enablement (TRACE) program, allows exporters with a valid Importer Exporter Code and a Udyam Registration Number to apply for financial assistance via the Directorate General of Foreign Trade. By taking on these costs, the government aims to ensure that firm size does not prevent Indian businesses from accessing major global markets.
This intervention is being introduced at a challenging time for the sector. In the 2025-26 fiscal year, Indian merchandise exports to the European Union declined by 4.57%, dropping to USD 72.4 billion. As the EU accounts for roughly 17% of India’s total outbound merchandise shipments, the government is prioritizing the removal of regulatory frictions. While compliance costs are a major issue, it is important for investors to note that global demand and high interest rates in overseas markets remain significant factors affecting export volumes. Ensuring certification compliance is a crucial step, but it is not a direct substitute for strong consumer demand in importing nations.
For investors, the long-term impact of this policy lies in the stabilization of supply chains. Many small enterprises that receive this support are part of the broader supplier network for larger, listed export-oriented companies. If these smaller firms can maintain compliance without bearing the full financial burden, it may lead to more consistent supply and reduce the risk of disruption for larger exporters. The primary monitorable for the next few quarters will be the pace of program adoption, the speed of fund disbursement, and whether these certifications lead to a measurable improvement in export volumes to the EU amid wider global economic pressures.