India's New Trade Policy: The 10 Biggest Takeaways for MSMEs

For most of the last decade, India's export support was built around large exporters. Schemes existed, but the paperwork, collateral requirements and minimum thresholds meant a small unit in Tiruppur or Moradabad often could not realistically reach them.

That has changed materially in 2026. The Export Promotion Mission went live, interest subvention started flowing through banks, the courier export cap disappeared, and two major trade agreements moved from negotiation to actual operation.

Here are the ten developments that matter most if you are a micro, small or medium exporter — what each one is, and what it changes for you.

1. The Export Promotion Mission Is Now the Main Framework

The Export Promotion Mission (EPM) was approved by the Union Cabinet in November 2025 and launched on 20 February 2026, with an outlay of ₹25,060 crore running from FY 2025-26 to FY 2030-31. DGFT is the nodal implementing agency.

It replaces a scatter of separate schemes with one framework built around two sub-schemes:

• Niryat Protsahan — financial enablers: interest subvention, export factoring, collateral guarantees, e-commerce exporter credit, credit enhancement
• Niryat Disha — non-financial enablers: quality and compliance support, branding and packaging, trade fairs, warehousing and logistics, inland transport reimbursement, trade intelligence

Why it matters for MSMEs: the mission was explicitly designed around MSMEs, first-time exporters and labour-intensive sectors, rather than treating them as an afterthought to a large-exporter scheme.

This absorbed schemes you may know by other names. The Interest Equalisation Scheme and the Market Access Initiative have been consolidated into EPM. If you are working from pre-2026 guidance, the benefits continue but the framework and application route have changed.

2. Interest Subvention: 2.75% on Export Credit

This is the most immediately usable measure on the list.

DGFT launched interest subvention on pre- and post-shipment rupee export credit under Niryat Protsahan, effective 2 January 2026.

The terms:

• 2.75% per annum subvention on pre-shipment and post-shipment rupee export credit
• Maximum benefit of ₹50 lakh per exporter per financial year
• Available to MSME manufacturer and merchant exporters
• Applies only to credit sanctioned on or after 2 January 2026

What you need: a valid, active IEC (not suspended, cancelled or on the Denied Entity List) and a valid Udyam Registration Number.

How it works in practice: your lending institution passes the subvention to you upfront as a reduced rate, then claims reimbursement from the RBI. You do not chase a government department for the money.

The step most exporters miss: you must file an online declaration of intent on the DGFT portal, which generates a Unique Identification Number (UIN) linked to your lending bank. Without the UIN, the bank cannot process your benefit.

⚠️ Check your HS code first. The subvention applies only to a notified positive list of roughly 4,139 HS six-digit tariff lines — not all 12,000-odd lines. The list was built around labour-intensive sectors, MSME concentration and value addition, while excluding restricted and prohibited items, waste and scrap, and products already covered by overlapping incentive schemes. Some sectors were left out, and industry bodies have been petitioning for additions. The list is reviewed periodically.

3. The Positive List Was Expanded in April

DGFT expanded the scope of the interest subvention scheme through Trade Notice No. 01/2026-27 dated 20 April 2026, adding tariff lines that were not in the original January list.

Two conditions to note: the expansion applies prospectively — only to export credit disbursed on or after 20 April 2026 — and medium enterprises are not eligible for the newly added lines, only micro and small.

What to do: if your HS code was excluded in January, check again. It may have been added.

4. Interest Subvention Now Covers Export Factoring Too

Beyond bank credit, DGFT operationalised Support for Alternative Trade Instruments through Trade Notice No. 25/2025-26 dated 20 February 2026.

This extends the same 2.75% subvention and ₹50 lakh annual cap to the interest cost of export factoring arrangements — both recourse and non-recourse, in rupees or freely convertible foreign currency — entered into with RBI or IFSCA-regulated entities.

Why this matters: factoring converts your receivables into working capital without waiting for the buyer to pay. For an MSME running on a thin cash cycle, subsidised factoring can be more useful than a subsidised loan.

5. Collateral-Free Export Credit Through the Credit Guarantee Scheme

Lack of collateral, not lack of orders, is what stops many MSME exporters from scaling.

The Credit Guarantee Scheme for Exporters (CGSE) provides up to ₹20,000 crore in additional credit support, implemented by the Department of Financial Services through NCGTC, with 100% credit guarantee coverage for Member Lending Institutions. It enables collateral-free export credit and additional working capital of up to 20% of sanctioned export working capital limits.

Separately, the Mutual Credit Guarantee Scheme (MCGS-MSME) was revised in March 2026 with targeted incentives for exporter MSMEs: 60% guarantee coverage by NCGTC for credit facilities up to ₹100 crore for equipment and machinery purchases, the 5% upfront contribution made refundable from the fourth year onwards, eligibility extended to service-sector MSMEs, and the minimum project cost requirement for machinery reduced from 75% to 60%.

6. The ₹10 Lakh Courier Export Cap Is Gone

A structural fix for small and e-commerce exporters.

The per-consignment value limit of ₹10 lakh for exports through courier mode has been removed, via DGFT Notification No. 67/2025-26 dated 27 March 2026 and CBIC Notification No. 34/2026 dated 31 March 2026.

Previously, a consignment above ₹10 lakh could not go by courier and had to shift to a heavier, slower cargo process. That cap is gone.

Also fixed: CBIC Notification No. 33/2026 dated 31 March 2026 simplified reverse logistics, facilitating re-import of export rejects and returned goods for cross-border e-commerce. Returns have long been a practical barrier for small exporters selling on overseas marketplaces.

And on the banking side: the RBI relaxed export reconciliation requirements for exports up to ₹10 lakh, cutting compliance overhead on small shipments.

7. Dedicated Credit for E-Commerce Exporters

DGFT issued guidelines for credit assistance aimed specifically at MSMEs selling through digital channels.

Who qualifies:

• A proven track record of at least six months exporting through postal or courier channels, or
• Current inventory placed in overseas warehouses for e-commerce fulfilment, or
• Stock placed in warehouses under the E-Commerce Export Hub facility

Also eligible: new MSMEs entering international value chains through e-commerce, provided they have at least one year of regular domestic e-commerce operations.

The point of it: the support is designed to let you manufacture ahead of anticipated demand rather than only against confirmed orders — the working-capital problem at the heart of e-commerce exporting, where you must stock overseas warehouses before you sell anything.

8. India–UK CETA Is Now Live

The India–UK Comprehensive Economic and Trade Agreement entered into force on 15 July 2026, alongside the Double Contribution Convention on social security.

This is not a future prospect — it is operational now. It reduces tariffs on thousands of products and opens services markets, and is India's most comprehensive agreement with a G7 nation.

What MSMEs must actually do: an FTA does not deliver benefits automatically. Your UK buyer only gets the reduced duty if you supply a preferential Certificate of Origin and your goods meet CETA's rules of origin. That means real domestic value addition, evidenced by a cost sheet.

→ See How to Get a Certificate of Origin in India — Step by Step for the eCoO 2.0 process.

9. The Wider FTA Map Is Expanding Fast

Beyond the UK:

• India–EU FTA — concluded 27 January 2026, described as the largest deal either side has concluded, and now moving through ratification on both sides
• India–New Zealand FTA — signed 27 April 2026
• India–Oman CEPA — concluded, alongside other agreements moving toward implementation
• India–US — an interim agreement framework was announced in February 2026, with negotiations continuing

The MSME angle: more agreements mean more preferential opportunities, but each has its own rules of origin, its own certificate format and its own documentation. Diversifying across markets means managing several rulebooks, not one.

→ Our earlier analysis on why compliance often matters more than the tariff cut itself: India–EU FTA: Why Compliance May Matter More Than Tariff Cuts

10. Proposed: No RCMC for Exports Under ₹10,000

The newest item on this list, and one worth watching.

Through Trade Notice No. 14/2026-27 dated 20 July 2026, DGFT opened stakeholder consultation on inserting a new Para 2.57(c) into FTP 2023. The proposal would remove the RCMC requirement for export consignments with an FOB value up to ₹10,000.

Items classified as Restricted under ITC (HS) would be excluded and continue under existing authorisation requirements.

Status: proposal, not law. This is a consultation under the Para 1.07A mechanism. Comments were invited from exporters, EPCs and industry associations. It is not yet in force — do not plan around it, but do watch it.

Why it matters: for artisans, craft sellers and micro exporters shipping small parcels, obtaining and renewing an RCMC has been disproportionate to the value shipped. This would remove that friction at the very bottom of the market.

What to Actually Do This Quarter

If you are an MSME exporter, a practical sequence:

1. Check your Udyam Registration is valid and your IEC is active and not on the DEL
2. Look up your HS code against the interest subvention positive list — including the April additions
3. File the declaration of intent on the DGFT portal to generate your UIN, and link it to your bank
4. Ask your bank about CGSE-backed collateral-free export credit, not just the subvention
5. If you sell online, review whether the removed courier cap and e-commerce credit change your fulfilment model
6. If you ship to the UK, confirm your goods meet CETA rules of origin and get your preferential CoO process right
7. Watch DGFT trade notices — under Para 1.07A, proposals are published for comment before they take effect

Frequently Asked Questions

What is the interest subvention rate for MSME exporters in 2026? 2.75% per annum on pre- and post-shipment rupee export credit, capped at ₹50 lakh per exporter per financial year, for eligible HS lines on the notified positive list.

Do I need Udyam registration to claim export benefits? For the EPM interest subvention, yes — a valid Udyam Registration Number and an active IEC are both required.

Why is my product not eligible for interest subvention? The scheme covers a positive list of around 4,139 HS six-digit lines, not all tariff lines. Restricted and prohibited items, waste and scrap, and products under overlapping incentive schemes were excluded. The list is reviewed periodically and was expanded in April 2026.

What happened to the Interest Equalisation Scheme? It was consolidated into the Export Promotion Mission. Interest subvention now operates under the Niryat Protsahan sub-scheme with revised terms — check current rates rather than relying on pre-2026 figures.

Is there still a value limit on courier exports? No. The ₹10 lakh per-consignment limit was removed in March 2026 by paired DGFT and CBIC notifications.

Does the India–UK CETA automatically reduce duty for my buyer? No. Your buyer claims the preferential rate only if you provide a valid preferential Certificate of Origin and your goods meet CETA's rules of origin.

Do I still need an RCMC? Yes, currently. A proposal to exempt consignments up to ₹10,000 FOB value is at consultation stage as of July 2026, not in force.

The Bottom Line

The direction of 2026 policy is clear: move support from large exporters toward MSMEs, deliver it through banks and digital platforms rather than reimbursement paperwork, and remove structural caps that penalised small shipments.

The catch is that almost none of it is automatic. The subvention needs a UIN. The FTA benefit needs a certificate of origin and a defensible cost sheet. The credit guarantee needs a conversation with your lender. Most of these measures are also running on a pilot basis with guidelines still being refined through stakeholder consultation — which means terms can change, and it pays to check current notices rather than rely on a summary.

This article reflects the position as of July 2026 and is general information, not advice. Several measures described are operating on a pilot basis with guidelines under active consultation. Verify current terms on the DGFT portal at dgft.gov.in, with your lending bank, or with your Export Promotion Council before acting.