Exports Up 23% in September: What It Means for India's MSMEs

India's merchandise exports rose 23 per cent in September 2026 to $44.4 billion, the sixth straight month of double-digit growth, according to Commerce Ministry data released on 15 October. Imports grew a slower 8 per cent, so the goods trade deficit narrowed to $30.2 billion from about $33 billion a year earlier. For India's small manufacturers and traders, who produce close to half of the country's exports, this is welcome news. It is also less evenly shared than the headline suggests.

What the September numbers show

Total exports of goods and services reached an estimated $80.75 billion in September, up 11 per cent. The July to September quarter was the highest second quarter on record for total exports, and growth in the quarter (15.8 per cent) was faster than in April to June (11.8 per cent). Commerce Secretary Rajesh Agrawal credited higher shipments of electronic goods, petroleum products, engineering goods, chemicals and farm products.

Markets moved as well. Exports to the United States, India's largest market, rose 48 per cent to $8.03 billion. Shipments to China rose 24 per cent to $1.81 billion, and exports to Singapore and Malaysia more than doubled. The Gulf went the other way: exports to the UAE fell 11.8 per cent and to Saudi Arabia 14.7 per cent, at a time when the Iran conflict and attacks near the Strait of Hormuz have unsettled the region.

Three things that flatter the headline

A 23 per cent jump is real money. But three factors make it look stronger than the underlying demand:

• A low base. September 2025 was the first full month in which most Indian goods paid a 50 per cent tariff in the US, and shipments that month were weak. Comparing against it exaggerates the recovery, especially in the US numbers.
• Prices and the rupee. With Brent crude above $100 a barrel, petroleum exports earn more per tonne without shipping more. A weaker rupee lifts rupee earnings further: between April and August, exports grew 17.9 per cent in dollars but 30.3 per cent in rupees, according to the Global Trade Research Initiative (GTRI).
• A deadline. The RoDTEP and RoSCTL export rebates were due to expire on 30 September, which may have led some exporters to ship early to be sure of the benefit. Both schemes have since been extended to 31 December 2026.

None of this cancels the good news. It means the next six months, not September alone, will show whether demand has really turned.

How MSMEs contributed

MSMEs make close to half of what India sells abroad. The Economic Survey 2025-26 puts their share of exports at 48.58 per cent, up from the 45.73 per cent the MSME Ministry cited in mid-2025. Monthly trade data does not split exports by the size of the firm, so the MSME share of September's growth cannot be measured directly. The sector mix still tells a good part of the story.

Several of the categories that grew fastest are built on small and medium firms:

• Engineering goods, up 20.9% to $12.17 billion. India's largest export group rests on a dense web of MSME suppliers: castings and forgings in Rajkot and Kolhapur, fasteners and hand tools in Ludhiana and Jalandhar, pumps and motors in Coimbatore, and auto components around Pune and Chennai.
• Chemicals, up 24.2% to $2.94 billion. Dyes, intermediates and speciality chemicals come largely from units in Gujarat's Vapi, Ankleshwar and Vadodara belt, and from Maharashtra.
• Cotton yarn, fabrics and made-ups, up 20.8% to $1.12 billion. Home textiles and made-ups from clusters such as Panipat, Karur and Solapur.
• Gems and jewellery, up 19% to $3.37 billion. Diamond cutting in Surat and jewellery making in Mumbai and Jaipur are overwhelmingly small-firm industries.
• Handicrafts, up more than 35%. Brassware from Moradabad and woodwork from Saharanpur and Jodhpur are made almost entirely by micro units and artisans.

Electronics, the biggest gainer, is a different picture. Its growth is led by large assemblers of smartphones and other devices working under the production-linked incentive (PLI) schemes. MSMEs take part as suppliers of components, plastics, packaging and tooling, but most of the value in this surge goes to big firms. Electronics imports also rose 51.5 per cent, faster than exports, because so many components are still brought in.

The sectors that have not recovered

The weak spot is the labour-intensive end of the export basket, where MSMEs employ the most people. GTRI's analysis of April to August 2026 data found ready-made garments down 9.1 per cent, leather products down 4.3 per cent and ceramics and glassware down 21.6 per cent. Marine products, up 14.3 per cent, were the main exception. September did not change the pattern for ceramics, which fell another 15.6 per cent, or for cashew, down 39.4 per cent. Tea, tobacco, spices, and fruits and vegetables were also lower between April and August.

Higher dollar earnings alone do not tell us whether Indian producers are actually selling more.Vinod Kumar, President, India SME Forum

That is the gap that matters for small exporters. A garment unit in Tiruppur or a shoemaker in Agra gains nothing from higher oil prices or a busier phone assembly line. What it needs is orders at a price that covers rising costs.

The scope: where the next orders can come from

There is real room to grow, and much of it is new:

• The United States. Duties on most Indian goods are now a fraction of the 50 per cent levied in late 2025, following the February 2026 interim trade deal and later changes to US tariffs. Exporters who lost US buyers last year have a window to win them back. Rates still vary by product, so check the duty on your HS code.
• The United Kingdom. The India-UK Comprehensive Economic and Trade Agreement came into force on 15 July 2026. About 99 per cent of Indian exports now enter the UK duty-free or at reduced tariffs. That matters most for garments, leather, footwear, marine products and processed food, the sectors that need help most.
• The European Union. The India-EU free trade agreement was concluded on 27 January 2026, and in September the European Commission asked EU member states to authorise its signing. It is not yet in force, but buyers are already planning their sourcing for when tariffs fall.
• Asia. Exports to Singapore and Malaysia more than doubled in September, and exports to China rose 24 per cent. Many small exporters have never tried these markets.
• Cross-border e-commerce. The Export Promotion Mission now supports e-commerce exports and overseas warehousing, which gives micro units a way to sell abroad without a large distributor.

There is also a quieter opportunity at home. As electronics, defence and automotive supply chains move to India, large exporters need local suppliers of machined parts, moulds, wiring harnesses, packaging and testing. For many MSMEs, becoming a qualified supplier to an exporter is an easier first step than exporting directly.

The challenges

Higher demand does not help much if the order cannot be financed or loses money. As we wrote after the RBI's October decision in RBI's Rate Hike and $100 Oil, costs are rising on several fronts at once. For exporters, six stand out:

Support you can use now

The Export Promotion Mission, approved in November 2025 with an outlay of ₹25,060 crore, has rolled out several MSME-focused measures this year:

• Interest subvention of 2.75 per cent on pre- and post-shipment rupee export credit for products on the eligible list, capped at ₹50 lakh per exporter (IEC) a year. Rates are reviewed twice a year.
• Collateral support through CGTMSE, with guarantee cover of 85 per cent for micro and small exporters and 65 per cent for medium exporters.
• Logistics support of up to 30 per cent of eligible transport costs, up to ₹20 lakh per exporter a year.
• Help with compliance, trade intelligence, e-commerce exports and overseas fulfilment.

The RoDTEP and RoSCTL rebates also remain available until 31 December 2026 at existing rates, after the government extended them on 30 September. Industry has asked for a five-year extension.

What MSME exporters should do in the next 90 days

Our view

September confirms that Indian exporters can win back ground quickly when tariff walls come down. Exports have now grown by double digits for six months in a row. But the growth is narrow: a few sectors and large firms are carrying much of it, while job-rich MSME sectors are still below last year's levels.

We are cautiously optimistic. With the UK agreement in force, the EU agreement on its way and US duties much lower, the next twelve months offer Indian MSMEs one of the best market-access windows they have had in years. The firms that gain will be those that sort out finance, compliance and pricing now, before the orders arrive. If you want help building an export plan, from choosing markets to claiming schemes, talk to us.