During the past few years, a strong progress has been made in the photo-writing of fiber Bragg gratings (FBGs) in polymer optical fibers (POFs), animated by the constant wish to enhance the grating reflectivity and improve the sensing performances. In this paper, we report the photo-inscription of highly reflective gratings in step-index POFs, obtained thanks to a slight etching of the cladding. We demonstrate that a cladding diameter decrease of ~12% is an ideal trade-off to produce highly reflective gratings with enhanced axial strain sensitivity, while keeping almost intact their mechanical resistance. For this, we make use of Trans-4-stilbenemethanol-doped photosensitive step-index poly(methyl methacrylate) (PMMA) POFs. FBGs are inscribed at ~1550 nm by the scanning phase mask technique in POFs of different external diameters. Reflectivity reaching 97% is achieved for 6 mm long FBGs, compared to 25% for non-etched POFs. We also report that a cladding decrease enhances the FBG axial tension while keeping unchanged temperature and surrounding refractive index sensitivities. Finally and for the first time, a measurement is conducted in transmission with polarized light, showing that a photo-induced birefringence of 7 × 10(-6) is generated (one order of magnitude higher than the intrinsic fiber birefringence), which is similar to the one generated in silica fiber using ultra-violet laser.