Page 29 - Banking Finance September 2025

ARTICLE

India’s Export to UK - FY 2020 - 25 "Sectoral Composition of India's Exports to

the UK (2024)"

Source: -National Import-Export Record for Yearly Analysis
of Trade - niryat.gov.in

Expanding Opportunities for MSMEs
The MSME sector in India, which contributes nearly 40 per-
cent of exports and employs millions, is poised to be one of
the biggest beneficiaries of the agreement. MSMEs often
Industries majorly dominated by MSMEs-contribute to UK-
operate on thin margins and are highly sensitive to changes
bound exports.
in trade costs. By removing tariffs, the CETA reduces the
landed cost of Indian goods in the UK, giving MSME export-
ers a critical price edge. Tarriff on export goods pre and post imple-
mentation of CETA
But the benefits go beyond just cost competitiveness. Many
Various Products Pre FTA Duty Post FTA
MSMEs, particularly in textiles, handicrafts, processed foods,
and leather, cater to niche segments of the UK market. Range Duty
With tariffs eliminated, these enterprises can now scale up Processed Food Upto 70%
their exports more easily. Moreover, the CETA provides in- vegetable Oil Upto 20%
stitutional mechanisms for information sharing, such as con- Transport/Auto Upto 18%
tact points for MSMEs in both countries. Leather/Footwear Upto 16%

Electrical Machinery Upto 14%
This ensures that small businesses are better informed about
Textile/Clothing Upto 12% 0%
market regulations, certifications, and opportunities. For
instance, an MSME producing eco-friendly leather goods in Wood/Paper Upto 10%
Kanpur will find it easier to understand UK compliance re- Base Metals Upto 10%
quirements and access B2B trade promotion events facili- Mechanical Machinery Upto 8%
tated under the agreement. Mineral Upto 8%

Chemicals Upto 8%
This boost to MSMEs also has a multiplier effect on bank-
Plastic/Rubber Upto 6%
ing. Since small businesses often require working capital,
export credit, and risk management services, banks will find Gems & Jewellery Upto 6%
an expanded customer base demanding trade finance prod-
ucts. In fact, one can reasonably expect export-oriented Marine Products, Pharmaceuticals, and
MSMEs to turn increasingly towards formal banking chan-
nels for financing their growth, which will deepen financial Engineering: Rising Export Stars
inclusion. Among India's diverse export sectors, marine products hold

26 | 2025 | SEPTEMBER | BANKING FINANCE