Export Opportunity Ahead

Minister Piyush Goyal's call to action highlights a major opportunity for India's export sector to use preferential market access agreements. These pacts with 38 developed nations grant access to about two-thirds of global trade. However, fully tapping this potential requires a strong focus on superior product and service quality. This means Indian businesses must compete effectively in these markets, a move particularly beneficial for MSMEs, farmers, and artisans.

Quality: The Key to Global Markets

India has secured eight Free Trade Agreements (FTAs) covering 37 developed nations, with more in negotiation. These agreements offer reduced or zero-duty access, giving Indian exporters a key advantage. However, for these pacts to drive significant export growth, Indian businesses must meet strict international quality standards. Reports show that while India's exports have been resilient, about 63% of MSMEs lack essential certifications like ISO needed for global regulations. This quality gap is a major hurdle, as developed markets have stringent rules where small deviations can lead to product rejection. Amid global trade challenges and potential US tariff increases, Indian exporters must compete on quality, not just price. Recent FTAs, including those with Australia, the UAE, and EFTA, aim to integrate India into global supply chains, but utilizing them effectively is an ongoing challenge.

Challenges and Growth Figures

India's export performance presents a mixed outlook. Merchandise and services exports reached about $714.73 billion in April-January FY 2025-26, a 5.26% increase. However, this growth faces ongoing challenges. Global merchandise trade growth is forecast to slow to 1.9% in 2026 due to geopolitical risks and energy price swings, according to the WTO. Indian exporters often face a 15-20% cost disadvantage against competitors like China and Pakistan, attributed to high raw material duties, inefficient logistics, and less access to modern manufacturing technology. Additionally, only around 10% of Indian MSMEs currently export, far fewer than nearly 40% in comparable economies. This limited export participation stems from low market awareness and few buyer connections. To achieve the goal of $1 trillion in exports by FY28, India's manufacturing sector must shift from growth based on scale to technology-driven competition and added value. Programs like Production-Linked Incentives (PLI) are boosting manufacturing and exports in areas such as electronics and pharmaceuticals, but meeting international standards remains crucial. While FTAs have shown a modest improvement in performance over non-FTA partners, their overall effect on export growth has been moderate, highlighting the need for greater utilization and integration.

Key Challenges for Businesses

Despite the potential of FTAs, significant structural challenges remain. A key concern is whether most Indian businesses, especially MSMEs, are ready to meet the demanding quality, safety, and compliance rules of developed markets. Many small businesses face difficulties with complex paperwork, limited access to funds, and poor infrastructure, which result in higher logistics costs and delays. Indian exporters also face a competitive disadvantage compared to rivals who receive substantial government subsidies. Furthermore, India's exports are heavily concentrated in only about 100 districts, suggesting a need for wider, inclusive growth across regions. While government quality improvement programs like ZED Certification exist, the number of Indian firms holding standards like ISO 9001 is still low compared to blocs like the EU. Studies question the effectiveness of FTAs, noting low utilization and mixed results in boosting exports. This suggests that simply signing agreements is not enough without the capacity to benefit from them.

Vision for Growth and Development

The effort to fully use FTAs is closely tied to the Viksit Bharat 2047 national vision, which aims for a $30-$40 trillion GDP. Reaching this target requires consistent high growth, with exports seen as a primary driver. Minister Goyal emphasized the importance of skills, education, and language training for India's youth to boost global competitiveness, supporting the vision of women-led development for lasting economic prosperity. He also praised companies that spent more than required on Corporate Social Responsibility (CSR), viewing it as an investment in future markets and talent rather than just a duty. One company's allocation of 5% of profits was highlighted as a significant step beyond legal requirements, encouraging CSR efforts that deliver clear results. This combined focus on economic growth through trade and social progress through responsible business practices reflects a comprehensive strategy for national development.