India’s FTAs give MSMEs a shot at bigger global markets: Exporters
The Union government has highlighted that India has concluded free trade agreements (FTAs) with roughly 40 countries since 2014, presenting expanded market access opportunities for Micro, Small and Medium Enterprises (MSMEs).
Exporters note that the immediate challenge is converting this preferential access into actual export orders rather than the availability of agreements itself.
The message was directed particularly at MSMEs, encouraging them to leverage tariff concessions under India's FTA network to integrate into global value chains.
The push comes amid a broader effort to diversify India's export destinations and expand the base of first-time exporters beyond large corporates.
India's FTA/CEPA Network Since 2014
A Free Trade Agreement (FTA) is a treaty between two or more countries to reduce or eliminate tariff and non-tariff barriers on substantially all trade between them. India uses several formats — FTA, Comprehensive Economic Partnership Agreement (CEPA, typically covering goods, services and investment), and Comprehensive Economic Cooperation/Trade Agreement (CECA/ECTA).
Key Details
- India–UAE CEPA: signed 2022, in force since 1 May 2022 — India's first CEPA negotiated and concluded within roughly 90 days; bilateral trade crossed USD 100 billion in FY25.
- India–Australia Economic Cooperation and Trade Agreement (ECTA): in force from 29 December 2022 — India's first trade pact offering 100% tariff elimination on covered Australian lines.
- India–EFTA Trade and Economic Partnership Agreement (TEPA), with Iceland, Liechtenstein, Norway and Switzerland: signed 10 March 2024; includes a commitment of USD 100 billion in investment into India over 15 years, targeting roughly 1 million jobs.
- Other agreements/negotiations in the same period include India–Mauritius CECPA (2021), and continuing/ongoing negotiations with the UK, EU, US, New Zealand, Chile, Peru and Israel.
- Earlier-generation agreements pre-dating 2014 (Sri Lanka FTA 1998–2000, Thailand, Singapore CECA 2005, ASEAN FTA in goods/services, Korea CEPA, Japan CEPA) form the base network these newer deals build upon.
The claim of "around 40 countries since 2014" aggregates all these bilateral/plurilateral FTAs, CEPAs and ECTAs — the government's pitch is that MSMEs, not just large exporters, must now be equipped to use these tariff concessions.
MSME Definition and Classification
MSMEs are classified under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, with thresholds revised most recently effective 1 April 2025 based on investment in plant & machinery/equipment and annual turnover — a composite criterion introduced in the 2020 revision.
Key Details
- The 2020 revision (effective 1 July 2020) removed the earlier manufacturing-vs-services distinction and introduced a combined investment + turnover test.
- Nodal ministry: Ministry of Micro, Small and Medium Enterprises (MSME).
- Registration is done via the Udyam Registration portal (replaced Udyog Aadhaar in 2020).
- MSMEs contribute roughly 30% of India's GDP and around 45% of India's total exports (Ministry of MSME/Commerce Ministry data, order of magnitude figures cited in official statements).
Because most MSMEs lack in-house export/compliance expertise (rules of origin certification, tariff schedules), converting FTA access into orders requires targeted support — a key ask reflected in the article's framing of "utilisation" as the real challenge, not agreement count.
Rules of Origin and FTA Utilisation
Preferential tariffs under an FTA apply only if goods meet the agreement's Rules of Origin (RoO) — the criteria determining a product's "originating" status, without which exporters cannot claim concessional duty in the partner country.
Key Details
- RoO typically require a minimum percentage of value addition or a change in tariff classification (CTH/CTSH) within the exporting country.
- Utilisation rate (the share of eligible exports that actually claim FTA preference) is tracked separately from the FTA's tariff coverage — India's FTA utilisation rates have historically been below those of competing exporting nations, partly due to compliance costs for smaller firms.
- The Certificate of Origin under India's FTAs is issued through the government's e-CoO platform administered by the Directorate General of Foreign Trade (DGFT) / Ministry of Commerce and Industry.
Exporters' emphasis on "converting agreements into orders" points precisely to the utilisation gap — MSMEs need awareness and support to meet RoO documentation requirements to actually access the tariff concessions FTAs create on paper.
Foreign Trade Policy and Export Promotion Institutional Architecture
India's export promotion for MSMEs operates through a set of institutional mechanisms under the Ministry of Commerce and Industry.
Key Details
- Foreign Trade Policy (FTP) 2023 (in force from 1 April 2023, dynamic/ongoing framework replacing the earlier 5-year FTP cycle) is the overarching export policy document.
- Export Promotion Councils (EPCs), sector-specific bodies registered under the Companies Act, assist MSME exporters with market access and FTA-related guidance.
- Schemes such as Interest Equalisation Scheme, RoDTEP (Remission of Duties and Taxes on Exported Products), and District as Export Hub initiative are aimed at improving MSME export competitiveness.
These institutional mechanisms are the practical channels through which the government's call to "utilise FTAs" is meant to be operationalised for MSMEs.
- FTAs/CEPAs concluded by India: roughly 40 countries' worth of agreements since 2014.
- India–UAE CEPA in force from 1 May 2022; bilateral trade crossed USD 100 billion in FY25.
- India–Australia ECTA in force from 29 December 2022 — first Indian FTA with 100% tariff elimination on covered lines.
- India–EFTA TEPA signed 10 March 2024; USD 100 billion investment commitment over 15 years targeting ~1 million jobs.
- MSME classification revised effective 1 April 2025 (investment + turnover composite criteria, first introduced 1 July 2020).
- MSMEs contribute an estimated ~45% of India's total exports.