India's SME Exporters Show Resilience Despite Mounting Global and Internal Governance Challenges

A new research report from the Centre for Family Business & Entrepreneurship at Bharatiya Vidya Bhavan's S.P. Jain Institute of Management and Research in Mumbai reveals a striking contradiction in India's small and medium-sized export sector: businesses remain bullish about their prospects even as they contend with deteriorating conditions.

The Indian SME Family Business Trade Confidence and Internationalisation Report, developed jointly with Hansa Research, surveyed 461 business leaders across 14 cities including Ludhiana, Hyderabad, Jaipur, and Kolkata. Participants represented firms spanning manufacturing and trading sectors at various stages of family succession. The typical respondent company has logged 16.4 years in international markets, with 82 percent boasting more than a decade of export experience.

The research introduces a novel measurement framework featuring four distinct indices rather than a single composite score. This approach reveals the nuanced reality facing India's exporters.

The Trade Confidence Index, measuring optimism about sales growth, order pipelines, and trade financing, registered 74.3 out of 100—a solidly positive reading. Yet this optimism exists alongside troubling metrics elsewhere. The Risk Environment Index, which evaluates macro-level headwinds across 13 dimensions, scored just 45.8, indicating a uniformly challenging landscape. More alarming is the Risk Momentum Index at 40.5, signalling that every major risk category is intensifying rather than stabilizing.

Family governance tensions also weigh on these businesses. The Family Governance Risk Index recorded 45.6, reflecting succession concerns, generational differences in risk tolerance, and internal disagreements within family enterprises.

When these four measures are combined into a Net Trade Confidence Score using weighted methodology—40 percent from trade confidence, 35 percent from risk environment, 15 percent from risk momentum, and 10 percent from family governance—the result is 56.4. This represents a substantial 17.9-point decline from the standalone trade confidence figure.

This gap between what exporters believe they can accomplish and the hostile conditions they navigate forms the report's central insight. Tulsi Jayakumar, Executive Director of the Centre and a professor of economics and policy at SPJIMR, characterised the tension as fundamental: "Our data captures something that aggregate trade statistics simply cannot: the lived experience of an Indian SME exporter who is genuinely optimistic about what their business can achieve, while simultaneously navigating a risk environment that is hostile across every dimension and worsening across every trajectory."

The research points to six policy interventions requiring immediate attention. These include establishing a dedicated education programme on free trade agreements and their practical application, creating a specialized financing mechanism for family-business exporters to address persistent credit access gaps, and—notably—developing support structures for family governance issues within internationalisation strategies, an area currently neglected by existing export promotion bodies.

The findings pose a direct challenge to India's policymaking apparatus: how should the nation's most experienced and internationally-engaged SME family businesses be supported when they operate within an environment that is simultaneously hostile and deteriorating?