India’s small and medium enterprises (MSMEs) are expected to see a gradual lift in market conditions over the coming quarter, according to a new report from the Small Industries Development Bank of India (SIDBI). The outlook is buoyed by rising domestic demand and a recent cut in goods and services tax (GST) on many products and services.
SIDBI’s “MSME Outlook Survey” highlights the services sector as the strongest growth engine. Companies in this area say revenue expectations remain high, thanks largely to the upcoming festive season. While export sales have dipped to 43 percent, 56 percent of service‑sector exporters already anticipate a solid rebound next year.
The survey tracks two key indicators: the MSME Business Conditions Index (M‑BCI) and the MSME Business Expectations Index (M‑BEI). In the July‑September 2025 quarter, the M‑BCI slipped to 61.64 from 63.75, showing a modest dip in overall confidence. Manufacturing and services maintained steady optimism, but trading showed more volatility. Even so, the composite M‑BEI paints an upbeat picture, rising to 62.26 next quarter and projected to hit 66.57 by July‑September 2026.
Sales sentiment softened slightly for July‑September 2025, with only 50 percent of trading MSMEs and 47 percent of manufacturing firms reporting positive growth—down from the previous quarter. Nevertheless, service firms continued to generate momentum.
Cost pressures have eased in manufacturing and trading, mirroring low wholesale inflation, while input costs in services remained stable. However, many MSMEs still foresee ongoing cost challenges, especially as they adjust to post‑GST pricing dynamics.
Credit availability shows mixed signals. In manufacturing, 92 percent of firms now say credit is available, up from 88 percent last quarter, but many still find funding insufficient. In services, 19 percent of MSMEs report difficulty securing finance, an increase from 13 percent previously. Despite the hurdles, manufacturing MSMEs remain hopeful that supportive policies will improve access to working capital.
The SIDBI survey captures feedback from operators across manufacturing, services, and trading, filling critical data gaps with both leading and lagging indicators. Scores on the M‑BCI and M‑BEI range from 0 to 100, where values above 50 signal positive sentiment. The indices combine six factors—sales, profit margins, skilled labour availability, working‑capital access, overall finance, and general business environment—to deliver a comprehensive picture of the Indian SME business climate.
By providing quarterly updates, the report helps policymakers, investors, and business leaders gauge where small and medium enterprises stand in India’s evolving economy—especially in a post‑GST landscape where demand, cost, and finance dynamics are rapidly changing.
Source: ianslive
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