Digital platforms are now the primary export channel for India’s MSMEs, enabling targeted advertising, lower acquisition costs, and rapid market adaptation. A survey of 102 MSMEs finds 83.5% credit platforms with improving international outreach. However, proposed data‑use and competition rules that restrict cross‑platform data or impose opt‑in consent risk undermining personalized marketing and measurement, disproportionately harming small sellers who cannot build first‑party data silos. Policymakers should avoid blunt prohibitions and instead adopt calibrated safeguards: preserve interoperable data flows, craft clear safe‑harbor rules, and issue predictable guidance that protects privacy without erecting new non‑tariff barriers to MSME exports and sustain growth.
Union Minister Jitan Ram Manjhi underscored a central plank of India’s economic strategy: connecting the country’s 7.5 crore micro, small, and medium enterprises (MSMEs) with global markets through digitalisation and technology. The message was clear — digital tools and platforms are no longer optional for Indian small businesses; they are the bridge to customers across continents, democratizing market access in ways unimaginable a decade ago.
Increasingly, Indian MSMEs are going global not primarily through traditional trade missions or export houses, but on the back of large digital platforms — social media, e-commerce marketplaces, search engines, and integrated payment and logistics networks. A recent survey of 102 Indian MSMEs finds that 83.5% of respondents credit these platforms with directly improving their outreach to international customers. Many use personalised advertising tools on platforms like Google, Instagram, and Facebook to identify, target, and acquire customers abroad. Nearly half of those surveyed say these technologies reduce acquisition costs while expanding market reach.
These findings are not anecdotal. They reflect a broader global trend in which MSMEs that leverage personalised digital marketing and data-driven insights outperform peers that lack such access. Digital platforms enable smaller firms to compete with larger enterprises by matching them with their target audience, rather than requiring them to generate leads from scratch. They also provide real-time data on customer preferences, helping MSMEs adapt their offerings to diverse cultural and market requirements. In short, access to personalised advertising on large platforms with captive consumer networks, combined with digital connectivity, has become a new comparative advantage for small exporters in the 21st century.
Yet this optimistic narrative faces a policy dilemma. Across the world — and in India — lawmakers are debating digital competition and data governance laws that restrict cross-platform data use. Proposals that bar platforms from using data without complex user consent risk cutting into precisely the mechanisms that enable MSMEs to reach global buyers, because such rules can reduce the efficacy of personalised advertising.
A salient example is the European Union’s Digital Markets Act (DMA), which mandates that large digital platforms must enable end users to opt in freely to data processing and sign-in practices, while offering a less personalised but equivalent alternative. Crucially, the use of core platform services cannot be made conditional on user consent.
To understand the implications of such measures, one can look at privacy frameworks governing app tracking. Intended to enhance privacy by requiring explicit user consent for cross-app tracking, these frameworks have had far-reaching effects on the mobile advertising ecosystem. Studies indicate that opt-in requirements have significantly reduced advertisers’ ability to personalise ads and measure effectiveness — impacts that are felt most acutely by smaller advertisers operating with limited budgets.
Economists and platform scholars argue that personalised advertising — enabled in part by cross-platform data use and multihoming (allowing firms to gain insights across different ecosystems) — is a key source of value creation in digital markets. Restricting these synergies can dampen complementary innovation and diminish the competitive edge of smaller firms relative to larger incumbents that can absorb compliance costs or build first-party data silos. Such measures, whether framed as privacy protections or competition mandates, risk impairing MSMEs’ direct-to-customer (D2C) strategies and may inadvertently advantage larger players. Notably, India’s D2C market was projected to cross USD 100 billion in 2025.
The danger for India’s MSME ecosystem is therefore tangible. Regulatory frameworks that constrain platform data use could undermine the digital synergies that have enabled thousands of Indian firms to expand internationally. Well-intentioned as these laws may be in protecting consumer privacy or curbing platform dominance, they could inadvertently create new non-tariff barriers to market access for MSMEs. Unlike large corporations, smaller firms lack the scale to build bespoke data infrastructures; they rely on the integrated architecture of global digital platforms, which combine audience reach, analytics, targeting, payments, and fulfillment into interconnected ecosystems.
Policy debates must therefore aim for balance — not blunt prohibitions on data flows that power personalised engagement, but calibrated safeguards that protect privacy and competition without extinguishing the engines of MSME digital participation. India’s commitment to connecting MSMEs with global markets should be matched by a regulatory approach that recognises how modern digital trade functions: not as isolated storefronts, but as networked marketplaces where data is the connective tissue.
As policymakers refine instruments such as the Draft Digital Competition Bill, empirical evidence should guide the process alongside theoretical reasoning. Protecting privacy and promoting contestability remain essential objectives. But achieving them should not come at the cost of eroding the digital lifelines that enable India’s small businesses to truly make in India for the world.
[This article was first published on the ETEdge Insights website Here.]