Jaisal Sarma

India’s Micro, Small, and Medium Enterprises (MSMEs) are the backbone of the economy, with over 63 million businesses employing more than 110 million people. They contributed approximately 30% to India’s GDP and 45.73% to its exports in 2023-24, particularly in sectors like textiles, handicrafts, and food processing. Recognizing this, the government has initiated several reforms to strengthen the ecosystem. The Foreign Trade Policy (FTP) 2023, for instance, emphasizes ease of doing business, reduced compliance burdens, and incentives for e-commerce exports. Complementing this, schemes like the Export Development and Market Promotion Scheme (EDMPS) are helping MSMEs expand their international footprint by supporting participation in trade fairs, buyer-seller meets, and international marketing initiatives.

However, despite their significance, MSMEs face challenges such as limited access to capital, outdated technology, and regulatory complexities. The rise of e-commerce has offered a significant opportunity for these businesses to tap into global markets.

E-commerce platforms like Amazon, eBay, and Etsy have revolutionized global trade for MSMEs by reducing traditional barriers such as high marketing costs and complex distribution networks. These platforms connect small businesses directly to international customers, expanding their reach far beyond local markets. Competing on a global stage also compels MSMEs to raise their standards of quality and efficiency, which not only strengthens their international presence but simultaneously enhances their contribution to the domestic market. With the support of platform analytics, businesses can gain valuable insights into consumer preferences and adapt their offerings to meet global demand. By eliminating intermediaries, e-commerce has lowered costs and improved profit margins.

The global e-commerce market, valued at $800 billion in 2024 and projected to reach $2 trillion by 2030, presents immense opportunities. India aims to capture a 10% share, targeting $200–300 billion in exports from the current $5 billion. Growing demand for Indian products like millets, handicrafts, and textiles, combined with 800 million internet users and increasing digital penetration in Tier-2 and Tier-3 cities, positions MSMEs to contribute significantly to India’s $1 trillion export goal by 2030. The digital transformation of MSMEs, with 72% of transactions now digital, further enhances their potential to scale globally.

The Indian government has introduced several initiatives to bolster MSME e-commerce exports. In 2024, the Directorate General of Foreign Trade (DGFT) launched E-Commerce Export Hubs (ECEHs), offering integrated facilities like customs clearance, warehousing, and logistics support. Five pilot hubs are operational, with plans for expansion. The Foreign Trade Policy (FTP) 2023 simplified export processes, reduced compliance fees, and extended benefits like Duty Drawback and RoDTEP to courier and postal exports. The DGFT’s “E-Commerce Exports Handbook for MSMEs,” serves as a comprehensive guide, translated into multiple Indian languages for accessibility.

MSMEs face significant barriers in leveraging e-commerce for exports. Logistics costs in India, at 13–14% of GDP compared to a global average of 8–10%, erode competitiveness. Supply chain inefficiencies, such as delays in customs clearance, lead to penalties and shipment rejections. Payment challenges, including high Export Data Processing & Monitoring System (EDPMS) fees and restrictive shipping value variation limits, disproportionately affect small exporters. Compliance with international standards for certifications, packaging, and labelling strains limited resources. The digital divide, particularly in rural areas, and low digital literacy among small entrepreneurs hinder platform adoption. Moreover, many MSMEs operate informally, limiting access to formal financing and global value chains.

Addressing these challenges requires a blend of technology, policy reforms, and capacity building. Various ecommerce platforms offer cost-effective tools for inventory and compliance management, while AI-driven solutions, can automate customs processes to reduce errors. Extending the RBI’s 2024 EDPMS directive permanently and waiving fees for small shipments would alleviate financial burdens. Expanding ECEHs and partnering with logistics providers could lower delivery costs. Blockchain-based platforms could ensure secure, transparent transactions, while AI-powered mentorship programs could provide personalized guidance, especially for rural MSMEs.

Trade agreements like the India-UK Comprehensive Economic and Trade Agreement (CETA), signed in 2025, provide zero-duty access for 99% of India’s exports, benefiting MSME-heavy sectors like textiles and jewellery. With total bilateral trade at $56 billion in 2024–25, CETA’s dedicated MSME chapter includes contact points and information exchange on regulations and market access. Similar provisions are being pursued in negotiations with the US and EU. These agreements and global collaborations are critical for MSMEs to navigate complex trade environments.

India’s MSMEs hold immense potential to drive e-commerce exports, contributing to the $2 trillion export target by 2030. Government initiatives, trade agreements, and digital tools provide a strong foundation, but challenges in logistics, payments, and digital access persist. A multi-pronged strategy leveraging technology, refining policies, and building grassroots capacity can empower MSMEs to compete globally. By fostering digital transformation, enhancing market access, and addressing structural barriers, India can position its MSMEs as engines of inclusive economic growth, ensuring they thrive in the global digital economy.

*The Author is a leading policy professional at MSL Group