India can be reliable, resilient manufacturing partner to the world, FTAs an opportunity: PM

New Delhi: Prime Minister Narendra Modi on Tuesday said India can be a reliable and resilient manufacturing partner to the world, and that the recent free-trade pacts offer an opportunity to provide top-quality goods and services.

Studying the preferences and comfort levels of other countries is a paramount necessity, Modi said, speaking at a post-budget webinar to discuss reforms in sectors such as manufacturing and logistics, as well as for micro, small and medium enterprises (MSMEs). “Today, the world is looking for reliable and resilient manufacturing partners. India has the opportunity to play this role strongly.”

India signed multiple free-trade agreements (FTAs) in FY26, including with the UK, the European Union. India also agreed to an interim agreement with the US to increase market access for Indian exporters while protecting strategic sectors. A 6 February joint statement referred to reducing the tariff on New Delhi to 18% from 50% earlier. But on 20 February, the US Supreme Court ruled that the unilateral tariffs imposed by President Donald Trump were illegal, leading to a blanket 10% tariff on all nations.

“India has signed free trade agreements with many countries. A vast avenue of opportunities has opened up for us. In such a scenario, it's our responsibility to never compromise on quality. If we are to focus our most energy, intelligence, power, and understanding on one thing, we must place a strong emphasis on quality,” the prime minister said.

Modi also added that studying the requirements of trade partners is a necessity, and called on the industry to invest significantly in research and adopt new technologies to ensure quality.

Modi's appeal to businesses to adopt new technologies and ensure quality comes at a time the country is making efforts to improve manufacturing competitiveness and its position in the global value chain of goods. India is trying to maintain its economic growth momentum amid disruption in the multilateral trading regime and heightened global uncertainties. The US-Israel attack on Iran has already sent the West Asia region into turmoil, disrupting crucial trade routes and increasing oil prices.

As per the new definitions, micro businesses can invest up to ₹2.5 crore in plant and machinery and have an annual turnover of up to ₹10 crore. Their earlier limits were ₹1 crore and ₹5 crore, respectively. The government has similarly tweaked the investment and turnover limits used to categorise small and medium enterprises.

Now, small enterprises are defined as those with investment in plant and machinery under ₹25 crore and turnover under ₹100 crore. The definition of medium enterprises has been widened to include investment up to ₹125 crore and turnover up to ₹500 crore. Previously, the investment limit for medium enterprises was ₹50 crore, and their turnover had to be under ₹250 crore.

India has about 77 million MSMEs, which contribute to about 30% of the country's total economic output and 45% of its exports.

MSMEs must increase productivity, raise quality standards, and integrate into digital processes and strong value chains, Modi said, aligning with the Economic Survey FY26's strategy to manufacture crucial elements of global value chains (GVCs)—a strategy dubbed 'strategic resilience'.

He noted that the country’s largest-ever capex spending of ₹12.2 trillion was approved in the Union Budget for FY27, creating a plethora of opportunities for the industry.

“This year's budget proposes record capital expenditure. Building high-capacity transport systems, improving the interconnection between railways, highways, ports, airports, and waterways, and expanding various freight corridors and multi-modal connectivity are all essential steps to reduce costs and improve efficiency,” he said.

He also said India needs to leverage its urban centres as channels of growth, especially tier II and III cities, while also focusing on sustainability as a core part of business strategy.

“India's future growth will depend on how effectively we plan and manage our cities,” said the prime minister in his address.

“Today, a major transformation is underway in the global economy. Markets no longer look only at cost; they also consider sustainability. The Carbon Capture, Utilization, and Storage Mission is an important initiative in this direction,” Modi said. “Now, sustainability must be made a part of your core business strategy. Industries that invest in clean technology in a timely manner will be able to gain better access to new markets in the coming years.”