Low utilisation has limited the gains from India's past FTAs. What institutional measures can help MSMEs benefit from new agreements such as the India–New Zealand FTA?

India's FTAs have often helped imports more than exports. In Q1 FY26, exports to FTA partners fell 9% to USD 38.7 bn, while the trade deficit with them reached USD 26.7 bn [1]. One major cause is low utilisation, meaning tariff preferences that exist on paper but that exporters, mostly MSMEs, never claim. The India–New Zealand FTA gives zero-duty access on 100% of tariff lines [2], but it will deliver only if India's institutions close this gap.

Why MSMEs under-use FTAs

• Information gap: Small firms rarely know the tariff schedules or how to claim them. NITI Aayog has called for creating awareness and making effective use of FTAs [3].
• Compliance cost: To get zero duty, exporters must prove that goods are Indian under the rules of origin, which were a core negotiating track [4]. Before the deal, New Zealand's tariffs peaked at only 10% [5], so the paperwork can cost more than the saving.
• Non-tariff hurdles: Standards, testing and approvals often cost more than the duty itself.

Institutional measures

• District-level facilitation: Make the Department of Commerce's district-level outreach with industry associations [5] permanent as FTA help desks. These should give sector guides for textiles, leather, footwear, gems and engineering goods.
• Simpler origin certification: Use digital, self-certified e-certificates of origin and pre-cleared origin rulings for MSMEs, in line with NITI Aayog's push for simpler procedures [3].
• Regulatory support: Help pharma and medical-device MSMEs use the FTA's streamlined regulatory processes [5] through testing and certification support.
• Aggregation and finance: Reach artisans, farmers and women entrepreneurs, the groups the government expects to benefit most [5], through cooperatives, clusters and export credit. Promote duty-free inputs such as coking coal, wooden logs and scrap to lower production costs [5].
• Measure what is used: Publish a yearly utilisation rate, the share of eligible exports that actually claim zero duty. Bilateral goods trade is only about USD 1.3 bn [6], so New Zealand can serve as a low-risk pilot.

Awareness → Easy origin proof → Standards support → Finance/aggregation → Utilisation audit

Flowchart: The pathway from an FTA on paper to MSME gains

India's FTA problem lies more in making use of the deals than in negotiating them. Practical help on information, procedures, standards and finance can turn the New Zealand agreement into real export orders. This would also set a model for larger deals and advance SDG 8 (decent work and economic growth) through MSME-led, job-rich exports.