<p>While digital trade holds immense promise for micro, small and medium enterprises (MSMEs), several factors hinder its full realisation. This paper turns the spotlight on India to examine how MSMEs are positioned within the country’s rapidly growing digital landscape. It draws on empirical studies to analyse the impact of digital trade on Indian MSMEs and identifies the key challenges affecting their participation in the digital economy. These notably include the digital divide, the restrictive business practices of dominant platforms and data inequality. The centrepiece of this paper is to demonstrate how overcoming these challenges is an integral aspect of India’s approach to digital industrialisation. In this regard, the paper unpacks the key elements of India’s digital industrial policy, including its data governance framework, competition policy, and provision of digital public infrastructure. By assessing the effectiveness of these measures, the paper evaluates the potential of India’s development-oriented model to facilitate MSME participation in digital trade.</p>