In a bold move to empower its small and medium enterprises (SMEs), India is preparing to overhaul its export policy framework, aiming to unlock global markets and streamline international trade for millions of domestic sellers. The initiative, led by the Directorate General of Foreign Trade (DGFT), comes at a time when global trade dynamics are shifting and Indian SMEs face mounting challenges in accessing overseas buyers.
The new policy playbook is expected to introduce sweeping reforms, including an inventory-based e-commerce export model, simplified compliance mechanisms, and targeted incentives for priority sectors. With over 5.93 crore registered MSMEs contributing nearly 45% of India’s total exports in FY24, the government’s renewed focus on this segment signals a strategic pivot toward inclusive trade growth.
E-Commerce Export Reform: Inventory-Based Model in Focus
One of the most anticipated changes is the proposed allowance of an inventory-based model for e-commerce exports. Currently, foreign direct investment (FDI) rules prohibit platforms like Amazon and Flipkart from holding inventory, limiting their ability to support Indian exporters directly. The new framework would enable third-party export entities to manage inventory, logistics, and customs compliance on behalf of SMEs.
This model is expected to reduce operational burdens on small exporters, allowing them to focus on product innovation, branding, and quality control. A consultation meeting scheduled for September 15 will bring together stakeholders from major e-commerce platforms, logistics firms, and government departments to finalize the contours of this reform.
| Export Model Type | Current Status | Proposed Change | Impact on SMEs |
|---|---|---|---|
| Marketplace (No Inventory) | Allowed | No Change | Limited support |
| Inventory-Based Model | Prohibited | To be Allowed | Enhanced facilitation |
| Third-Party Export Entity | Not Defined | To be Introduced | Compliance outsourcing |
Policy Response to Global Trade Shifts
The urgency of reform is underscored by recent global developments. The United States has withdrawn its duty-free import provision for small parcels under $800, affecting thousands of Indian exporters who rely on low-value shipments. This has prompted New Delhi to explore alternative pathways for SMEs to maintain competitiveness in overseas markets.
The new policy aims to create a predictable and scalable export ecosystem, particularly for digitally enabled businesses. Less than 10% of Indian MSMEs currently engage in cross-border e-commerce, despite rapid growth in domestic online sales. The government’s goal is to double this participation by 2027.
Budgetary Support and Credit Expansion
The Union Budget 2025–26 has laid a strong foundation for SME export growth. Key measures include:
- Raising investment and turnover limits for MSME classification by 2.5x and 2x respectively
- Doubling credit guarantee cover for startups and export-focused MSMEs
- Launching a ₹5 lakh credit card scheme for micro enterprises registered on the Udyam portal
- Earmarking ₹1.5 lakh crore in additional credit over five years
| Budget Provision | FY25 Allocation | FY26 Target | Beneficiary Segment |
|---|---|---|---|
| MSME Credit Guarantee Expansion | ₹5 crore | ₹10 crore | Micro & Small Enterprises |
| Startup Guarantee Cover | ₹10 crore | ₹20 crore | Export-Focused Startups |
| Udyam Credit Card Scheme | New | 10 lakh cards | Registered Micro Enterprises |
| Additional Credit Availability | ₹1.5 lakh crore | Over 5 years | MSMEs across sectors |
These reforms are designed to improve liquidity, reduce financing costs, and enable SMEs to scale operations for global demand.
Sectoral Incentives and Export Schemes
The 2025 Export Policy update has identified electronics, green tech, chemicals, textiles, and processed food as priority sectors for MSME exports. These sectors will benefit from expanded Production Linked Incentive (PLI) schemes, faster duty refunds, and simplified licensing norms.
Key export schemes include:
- PLI 2.0: Covers toy manufacturing, food processing, and electronics
- MAI Scheme: Subsidies for international trade fairs and branding
- RoDTEP: Expanded to include more product categories for duty remission
| Export Scheme | Sector Focus | Benefit Type | MSME Eligibility |
|---|---|---|---|
| PLI 2.0 | Electronics, Food, Toys | Production Incentives | Scalable MSMEs |
| MAI Scheme | All Sectors | Branding & Trade Subsidy | Registered MSMEs |
| RoDTEP | Manufacturing & Agri | Duty Remission | Product-Based |
These schemes aim to enhance competitiveness, reduce export costs, and support market diversification.
Compliance Simplification and Digital Enablement
To reduce bureaucratic hurdles, the DGFT is digitizing documentation and automating licensing processes. Duty reimbursement claims will now be processed within 30 days, and exporters will benefit from real-time tracking of shipments and customs clearance.
The government is also exploring blockchain-based trade verification and AI-powered export analytics to help SMEs identify global demand trends and optimize pricing strategies.
| Compliance Area | Current Challenge | Reform Initiative | Expected Outcome |
|---|---|---|---|
| Duty Refunds | Delays up to 90 days | 30-day processing window | Improved cash flow |
| Licensing | Manual documentation | Online portal integration | Reduced time & cost |
| Export Intelligence | Limited access | AI-based analytics | Smarter market targeting |
These digital reforms are expected to reduce transaction costs by up to 25% and improve export predictability.
Global Market Access and Trade Partnerships
India is actively negotiating trade agreements with the UK, EU, and Gulf Cooperation Council (GCC) to secure preferential access for SME products. The new policy will align export documentation and standards with these agreements, enabling smoother entry into high-value markets.
The MAI scheme will also support participation in over 200 international trade fairs and exhibitions in FY26, helping SMEs showcase products and build global partnerships.
| Region | Trade Agreement Status | SME Export Focus | Market Potential |
|---|---|---|---|
| United Kingdom | Final Stage | Textiles, Food, Pharma | $12 billion |
| European Union | Ongoing | Electronics, Chemicals | $18 billion |
| GCC Countries | Bilateral Talks | Agri, Construction Goods | $9 billion |
These partnerships are expected to boost SME exports by 15–20% annually over the next three years.
Conclusion: A New Era for Indian SME Exporters
India’s new policy playbook for SME exporters represents a transformative shift in trade strategy. By combining regulatory reform, financial incentives, and digital enablement, the government is laying the groundwork for inclusive and sustainable export growth.
As global markets evolve, Indian SMEs are being equipped with the tools to compete, innovate, and thrive. The upcoming consultations and policy rollouts will determine how quickly these reforms translate into real-world impact. For millions of entrepreneurs, this could be the beginning of a new chapter—one where the world is truly open for business.
Disclaimer: This article is based on publicly available government statements, budget documents, and industry consultations. It is intended for informational purposes only and does not constitute financial or legal advice. All projections are subject to change based on policy implementation and global trade conditions.
