India may propose a global trade promotion body to enhance MSME exports amid rising trade deficits.
The upcoming Union budget may feature a proposal for a Global Trade Promotion Organization (GTPO) aimed at boosting exports for Micro, Small, and Medium Enterprises (MSMEs), according to three sources familiar with the matter. This initiative is driven by India’s growing trade deficit and the need to enhance export performance.
The GTPO, inspired by models like Japan’s JETRO and Australia’s AUSTRADE, will establish branches in major global economies. This organisation will specifically support MSMEs, which often lack the resources to promote their products internationally. There has been a demand for a body that can assist MSMEs in establishing a market presence abroad,” one source said.
Current trade promotion bodies in India, including the India Trade Promotion Organisation (ITPO), lack a substantial global presence and primarily operate domestically. The new GTPO aims to address this gap by providing MSMEs with support for registration, licensing, and certification necessary for international trade, in collaboration with India’s consulates abroad.
“The GTPO will function as a one-stop solution for MSME firms, aiding in reducing the trade deficit by encouraging exports,” another source noted. It will also help smaller businesses participate in global exhibitions, trade shows, and buyer-seller meets.
Vinod Kumar, president of the India SME Forum, emphasised the importance of such a body, suggesting it should aim to increase India’s exports to $1 trillion. India’s merchandise exports fell by 3.11 percent in FY24 to $437.06 billion from $451.07 billion in FY23. The trade deficit widened to $23.78 billion in May, largely due to a surge in imports.
MSMEs contribute approximately 45 percent to India’s total exports, 38 percent to manufacturing output, and 27 percent to GDP, employing over 110 million people. A NITI Aayog report highlighted the untapped export potential of MSMEs in sectors like handicrafts, textiles, and leather goods. It emphasised that exporting is crucial for MSMEs to overcome growth barriers and expand their market reach.
