An engineering enterprise in Rajkot, a textile unit in Tiruppur, a food-processing business in Assam or a technology firm in Bengaluru may already supply goods and services across borders. Yet participation in global value chains (GVCs) does not guarantee that these firms will grow. Many remain small suppliers in labour-intensive manufacturing and services, constrained by high export costs, limited bargaining power and geopolitical uncertainty.
The stakes for India are considerable. The Union government’s Udyam and Udyam Assist platforms recorded more than 8.7 crore registrations by June 2026, according to official data. The MSME sector contributes approximately 31.1% of GDP, 35.4% of manufacturing output and 48.58% of exports, according to government estimates. Its ability to expand into more sophisticated activities will influence India’s prospects for employment, industrial development and export competitiveness.
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The immediate constraint is often cash flow. Delayed payments tie up working capital, while lenders may lack reliable information about smaller borrowers or demand collateral they cannot provide. The Economic Survey 2025–26 estimated that ₹8.1 lakh crore was locked in delayed payments to MSMEs. Certification, export documentation, freight and logistics add to the cost of serving overseas buyers.
The September 2026 BRICS summit in New Delhi offers a timely opportunity to address some of these barriers. The New Delhi Declaration endorsed guiding principles for assessing creditworthiness among export-oriented MSMEs and welcomed the Jaipur Consensus to study a BRICS invoice-discounting mechanism. These commitments could help smaller firms finance orders and expand their international reach, provided members turn them into workable arrangements.
Market access must translate into higher productivity
Participation in GVCs can improve an MSME’s productivity by exposing it to regular orders, demanding buyers and new production methods. A supplier that develops the capacity to meet these requirements may progress from basic inputs to specialised components, or from routine services to design and technical work. Growing export demand can also increase purchases from domestic suppliers, spreading some of the gains to other businesses and workers.
The benefits, however, are not automatic. Falendra Kumar Sudan’s 2020 study of Indian automotive supply chains found that GVC participation offered modest benefits to smaller firms, while subcontracting created opportunities for economic, technical and functional upgrading. The study also highlighted the weaker bargaining power of smaller suppliers dealing with large buyers. The Asian Development Bank Institute study makes clear why market access alone cannot guarantee industrial upgrading.
For an MSME, the commercial case for an export order depends on the revenue left after production, buyer acquisition, compliance, logistics and financing costs. A tariff reduction may open a market to a supplier in Coimbatore, for example, but expensive certification or a long wait for payment can absorb the expected gain. If the order does not generate enough surplus to finance machinery or worker training, the firm may remain trapped in low-value production.
India has begun to address several of these constraints. The Export Promotion Mission, with an approved outlay of ₹25,060 crore for 2025–26 to 2030–31, brings together support for trade finance, export factoring, certification, market access and logistics. Production Linked Incentive schemes support manufacturing across 14 sectors, while PM GatiShakti seeks to improve infrastructure planning and connectivity. Digital payment systems have also made it easier to conduct transactions, although cross-border payments still involve costs and regulatory requirements.
The Union Budget 2026–27 proposed a ₹10,000 crore SME Growth Fund for enterprises with expansion potential. The fund’s emphasis on equity financing could help eligible firms invest in capacity and technology, rather than rely entirely on debt. The government’s announcement sets out its intended role.
The test for these initiatives is whether a smaller enterprise can navigate them and obtain support when it needs it. Schemes that address finance, certification and market access separately may still leave a firm unable to complete an export order. Cooperation with trading partners could help close some of these gaps.
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BRICS offers a wider network of buyers and suppliers
For Indian MSMEs, BRICS could open additional markets, provide access to technology and industrial knowledge, facilitate skills exchange and improve the financing of cross-border trade. The grouping’s economic diversity creates opportunities for firms whose capabilities complement those of other members.
Brazil has strengths in agriculture and minerals, Russia in energy and industrial inputs, China in manufacturing, and South Africa in mining and automotive production. India has established capabilities in pharmaceuticals, engineering, textiles, food processing and digital services. Egypt’s position around the Suez Canal, Indonesia’s location along major Southeast Asian shipping routes and the UAE’s role as a logistics and distribution centre could also help businesses explore new markets and supply arrangements.
These complementarities offer scope for Indian firms to diversify buyers and suppliers when geopolitical tensions or disruptions affect established trade routes. Members could also exchange experience in export finance, industrial policy and workforce development. But differences in regulations, industrial priorities and economic structures will make cooperation difficult in some sectors. A larger grouping does not, by itself, create an integrated market.
The UN Trade and Development report on two decades of intra-BRICS trade, published in March 2026, found that merchandise trade among the members had grown more than thirteenfold since 2003, reaching $1.17 trillion in 2024. Yet trade links remain below their potential relative to the bloc’s economic scale. The report identifies policy coordination and institutional differences among the barriers to deeper integration.
For a small exporter, the practical obstacles remain familiar. It must identify a buyer, establish that its product meets the buyer’s requirements, finance production and collect payment. BRICS cooperation will be useful if it reduces the cost or uncertainty at each stage.
The first priority is buyer access. Business forums, trade fairs and the proposed BRICS Connect initiative could help Indian firms identify demand and establish commercial relationships. To be useful, these platforms must provide more than networking opportunities: firms need information on import requirements, potential buyers and routes to market.
Standards are another barrier. Overseas buyers may require proof of compliance with quality, safety and environmental rules, and smaller firms often struggle to afford repeated testing and certification. BRICS members could explore mutual recognition of comparable test results in selected sectors, alongside shared technical guidance and accessible certification records. Such arrangements would require agreement among relevant regulators and accredited bodies; they cannot be assumed to follow from political commitments alone.
Finance is equally important. In September, BRICS ministers welcomed the Jaipur Consensus to study an invoice-discounting mechanism and adopted guiding principles for credit assessment that give greater weight to cash flow and other relevant information, rather than relying solely on collateral. If developed into operational arrangements, these measures could allow exporters to borrow against verified orders or invoices while awaiting payment. More efficient cross-border payment systems could further reduce uncertainty over when export revenue arrives.
Finally, industrial cooperation should connect firms with the technical capabilities they need to upgrade. Partnerships among manufacturers, research institutions, training centres and business clusters could help MSMEs adopt new production methods, improve product quality and move into more specialised activities. The objective should be commercial collaboration tied to identifiable demand, rather than exchanges that end with memorandums of understanding.
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Turn BRICS commitments into practical support
India’s domestic policies and BRICS initiatives need to reinforce one another. Four areas deserve particular attention.
First, reduce the cost of serving export markets. Licences, documentation, inspections, certification, freight and delayed payments can consume a substantial share of an MSME’s earnings from an order. Sector-specific assessments of these costs would help identify the reforms with the greatest benefit. Regulatory Impact Assessment can test the likely effects of proposed rules on smaller businesses, while reviews of existing regulations can remove unnecessary burdens without weakening safety, quality or environmental safeguards.
Second, connect industrial clusters to export markets. Firms producing related goods could share testing laboratories, certification services, packaging facilities and design expertise. Reliable freight links would connect these clusters to ports and overseas buyers. Germany’s specialised Mittelstand firms illustrate the contribution of technical skills and research networks to industrial competitiveness; Vietnam’s industrial parks illustrate the role of infrastructure and export connectivity. India could pursue comparable links with BRICS partners where there is demonstrable demand. Pharmaceutical producers, for instance, could explore commercial links with buyers in Brazil and African markets, while engineering firms could seek opportunities in South African mining supply chains.
Third, make existing support schemes work as a connected pathway. The Raising and Accelerating MSME Performance (RAMP) programme, cluster development initiatives, Zero Defect Zero Effect certification, export promotion bodies and the Export Promotion Mission address different needs. Clear referral systems could help a firm move from improving production processes to obtaining certification, finding buyers, financing orders and securing repeat business. Programme performance should be assessed by whether firms complete these steps and become more competitive, rather than by registrations or outreach alone.
Fourth, link working capital to longer-term investment. Verified purchase orders and invoices can provide a basis for financing while exporters wait for payment. Institutions such as SIDBI and the Export-Import Bank of India could help develop suitable products, with the New Development Bank considered for eligible projects within its mandate. Invoice discounting would address immediate liquidity needs; separate financing for machinery, cleaner technology, certification and workforce training would help firms move into higher-value production. The two purposes should complement each other without being confused.
India’s ambition to become a developed economy depends in part on whether its smaller firms can raise productivity and earn more from the markets they already serve. BRICS cooperation offers a route to new buyers and more resilient supply chains, but its value will be measured in the commercial opportunities MSMEs can actually use. The commitments made in New Delhi will count when an exporter can finance an order, meet a buyer’s standards, get paid on time and invest the proceeds in producing something of greater value.
Tasmita Sengupta is a Senior Research Associate at CUTS International, where she works on economic regulation and public policy.