• MSME Export Growth: Over 200% rise in MSME exports from 2020-21 to 2024-25

• Enhanced Credit Access: Financial Institutions & Governments have strengthened credit access to support MSME global competitiveness

• Unlocking Regional MSME’s Export Strengths: Locally produced high-quality export goods come from various regions across the country

• Global Market Opportunities: MSMEs can tap into international markets such as Southeast Asia, Africa, and Latin America via free trade agreements.

The number of Indian MSMEs in the export industry has been growing significantly from 52,849 in 2020-21 to 173,350 in 2024-25, reflecting a growth rate of over 200% in 4 years.1 In FY 2025, their share in total exports is expected to exceed 45%, driven by increased participation in global supply chains2. With the global economy recovering from unprecedented disruptions, there is a clear and present opportunity for Indian MSMEs to seize new export markets, build global supply chains, and diversify revenue streams.

To effectively scale and compete globally, Indian MSMEs need to combine strategic foresight, government-backed initiatives, access to credit and a focus on emerging global demand trends. While the below article also lists down strategic aspects that need to be kept by MSMEs into consideration, let’s first delve into the ways in which various financial institutions and Govt are supporting this growth.

Financial Institutions, particularly the Non-Banking Financial Companies (NBFCs), have shown remarkable growth in lending to the MSMEs, with AUM expected to cross ₹4.2 lakh crore byFY255.This substantial growth is complemented by the government’s recently allocated ₹2,250 crore towards export growth. Recent announcements by the Indian Govt during the FY 25 budget also focused on streamlined licensing and registration processes for MSMEs involved in exports and negotiating favorable trade agreements.

This financial support is complemented by an increase in the credit guarantee cover for MSMEs from ₹5 crore to ₹10 crore, unlocking an additional ₹1.5 lakh crore in credit over the next five years. By combining these financial resources with streamlined regulatory processes and enhanced access to digital platforms, Indian MSMEs are well-positioned to capitalize on international opportunities and strengthen their global presence.

India’s diverse regions offer a wide array of export opportunities across various sectors. The country’s strategic position in global trade is bolstered by its strong agricultural exports, textile production, and burgeoning manufacturing sector. The contribution of Micro, Small, and Medium Enterprises (MSMEs) play a crucial role in these sectors, for example:

1. Agriculture:

India’s agricultural exports, accounting for about 2.4% of global agricultural trade, reached $53.1 billion in FY 2022–23. Rice is a significant component of this export basket, with Basmati rice exports valued at $3,971.12 million and non-Basmati rice exports reaching $3,347.47 million in FY 2022–23. Key regions such as Punjab, Haryana, Uttar Pradesh, and West Bengal are pivotal for rice exports.

Having established itself as a major rice exporter, India also exports a diverse range of other agricultural commodities. These include spices, cotton, oil meal, castor oil, coffee, cashews, tea, fresh vegetables, and sugar. States like Maharashtra, Andhra Pradesh, Gujarat, and Uttar Pradesh are crucial for exporting fruits and vegetables to the Middle East and Southeast Asia.

By leveraging these regional strengths and strategic initiatives, India is well-positioned to enhance its presence in the global agricultural market.

2. Cotton and Textiles:

India accounts for about 23% of the world’s cotton production, making it a significant player in the global cotton market. In FY 2022–23, India produced 341.91 lakh bales of cotton, with major cotton-producing states including Maharashtra, Gujarat, and Madhya Pradesh. The country’s robust cotton production is supported by a strong manufacturing sector, with key textile hubs like Tirupur in Tamil Nadu and Surat in Gujarat driving industry growth. India’s cotton textiles are primarily exported to the United States, which accounts for 40% of exports, followed by Peru and Sri Lanka.

3. Tea and Coffee:

Assam contributes significantly to India’s tea exports. Due to their unique flavour profiles and geographical indications, Assamese speciality teas, including Darjeeling & Nilgiri, are highly popular in European and North American markets. Assam’s tea industry has seen significant growth over the years, with the state’s tea production being supported by both big and small growers, with small growers playing an increasingly important role. In 2023, Assam produced over 654.63 million kilograms of tea, highlighting its importance in India’s tea sector.

Like tea, coffee is a key contributor to the nation’s exports. The country has witnessed a notable rise in coffee exports, with over 9,300 tonnes shipped in the first half of January 2025 alone. Key buyers included Italy, Belgium, and Russia, demonstrating the growing international recognition of Indian coffee.

In fiscal year 2021-22, India solidified its position as the world’s fifth-largest coffee exporter, accounting for 6% of global output.8 Karnataka accounts for 70% of India’s total coffee output. The state’s coffee is renowned for its high-quality Arabica beans. Organic coffee from Karnataka is gaining popularity in international markets due to its sustainable production practices and distinct flavour profiles.

4. Manufacturing:

India’s exports of manufactured goods reached a high of 2205.97 INR Billion in March 2023.9 Major manufactured exports include refined petroleum, packaged medicaments, broadcasting equipment, and jewellery. These exports are driven by India’s strong manufacturing sector, which has been supported by initiatives like the Production Linked Incentive (PLI) scheme. Key markets for Indian manufactured goods are the United States, the UAE, China, Germany, and the UK, reflecting India’s strategic position in global trade. In 2023, India was the world’s largest exporter of diamonds and jewellery, with significant exports also in refined petroleum and packaged medicaments.

Strategies for MSME to Enhance Regional Export Opportunities:

• Quality Enhancement: Implement high-quality standards and practices to meet international market requirements and ensure products adhere to global norms.
  
• Technological Intervention: Leverage digitization and R&D to improve production techniques and post-harvest management, enhancing product quality and shelf life.
  
• Infrastructure Development: Invest in robust infrastructure, including cold storage, warehouses, and transportation networks, to facilitate efficient export logistics.
  
• Market Access: Develop unified bodies to handle market access requests and sanitary/phytosanitary issues, ensuring smoother trade negotiations.
  
• Brand Promotion: Promote ‘Brand India’ to increase market visibility and penetration, focusing on value-added and indigenous products.

Having explored the wealth of regional export opportunities and the strategies MSMEs can employ to enhance their competitive edge, examining the broader global landscape is crucial. Indian MSMEs are strategically positioned to leverage favourable trade agreements and evolving global demand patterns to expand their reach beyond domestic markets such as Southeast Asia, Africa, and Latin America.

1. Southeast Asia

The India-ASEAN Free Trade Agreement offers MSMEs a significant opportunity to tap into Southeast Asian markets. Countries like Vietnam and Indonesia provide fertile ground for Indian MSMEs to export textiles, handicrafts, and food products. For instance, Indian MSMEs can leverage Vietnam’s strategic location to access the broader ASEAN market.

2. Africa

Africa presents a growing market for Indian MSMEs, particularly in sectors like pharmaceuticals and IT services. The India-Africa Trade Agreement can facilitate increased trade and investment between Indian MSMEs and African nations. Countries like South Africa and Nigeria offer substantial opportunities for MSMEs to export machinery and automotive components.

3. Latin America

Latin America offers opportunities for MSMEs in sectors such as automotive components and machinery. Trade agreements with countries like Brazil and Mexico can enhance market access for Indian MSMEs. The region’s growing demand for sustainable products also presents a niche market for Indian MSMEs specialising in green technologies.

Conclusion

Indian MSMEs are rapidly expanding their global footprint, targeting a 45% contribution to national exports in FY 2025. This ambition is fueled by a powerful blend of factors: rapid sector expansion, proactive government support, improved access to credit and working capital, and promising global market opportunities.

To fully capitalise on this momentum, MSMEs must continue to prioritise quality enhancement, embrace technological innovation, and build robust infrastructure. Additionally, properly taking advantage of trade agreements helps in actively penetrating deeper into global supply chains.

Citations:
1. Plutus IAS study
2. Share of MSME in total exports from India FY 2020-25 – Statista
3. Economic Times BFSI- Govt. charts new export growth strategy at NITI Aayog
4. Merchandise EXIM status report of India’s MSME Sector
5. Care Ratings- MSME AUM for NMFCs to cross Rs. 4.2 crore by FY25
6. TransUnion CIBIL- MSME Report
7. Angel One- Growth of India’s Coffee Market
8. Coffee Board of India- Annual Report 2021-22
9. Trading Economics- India Exports of Manufactured Goods