Why ~99% of MSMEs don’t export; and how to fix it

India continues to remain one of the fastest-growing major economies globally, with real GDP projected to reach approximately USD 2.13 trillion in FY 2025–26 and nominal GDP expected to touch USD 3.76 trillion. This growth is increasingly supported by India’s integration into global markets, where exports play a critical role.

However, beneath this macroeconomic momentum lies a structural imbalance. While MSMEs contribute nearly ~48% of India’s total exports, only ~1.1% of them actively participate in export activities, as highlighted by NITI Aayog. This creates a fundamental disconnect: a large share of export value is driven by a very small base of enterprises.

The visible gap in India’s low MSME export participation might not be due to a lack of opportunity, but an absence of export readiness at the enterprise level. While the key execution gaps limiting MSME participation include capability constraints, sectoral concentration, and fragmented access to support systems, a simplified, execution-oriented framework would be able to improve MSME export readiness at scale.

If one looks at global trends, various export-oriented economies on IMF’s GDP Index, including Belgium, South Korea, and Vietnam have built strong export ecosystems supported by manufacturing depth, SME integration, and global value chain participation. In contrast, while India is among the world’s largest economies, exports account for a relatively smaller share of GDP, and enterprise-level export participation among MSMEs remains low. This highlights the need to strengthen MSME export readiness to support broader and more sustainable export-led growth.