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India’s micro, small and medium enterprises (MSMEs) are showing renewed optimism about their business prospects, backed by strong domestic demand, easing input costs, and supportive policy measures, according to a new survey by the Small Industries Development Bank of India (SIDBI). The findings suggest that MSMEs are benefiting from a stable economic environment and improved policy support, including the recent reduction in goods and services tax (GST) rates on select products. This comprehensive pan-India survey captures the perspectives of MSMEs operating across manufacturing, services, and trading sectors and aims to bridge critical data gaps through a lead as well as a lag indicator — the MSME Business Expectations Index (M-BEI) and MSME Business Conditions Index (M-BCI). These indices, which range from 0 to 100, reflect MSME sentiment, with values above 50 indicating a positive outlook. The M-BCI and M-BEI are derived from six key parameters: sales, profit margins, availability of skilled labour, access to working capital and overall finance, and the overall business situation. The survey also covers capacity utilisation, capital expenditure, interest cost trends, and ease of doing business. The current round is based on inputs from a representative sample of 1,200 MSMEs across different regions and industries. Sales sentiment softened modestly in Jul-Sep 2025, with 50% of trading and 47% of manufacturing MSMEs noting positive growth, down from the previous quarter. The services sector maintained its earlier momentum. Looking ahead, revenue expectations remain upbeat, bolstered by the festive season. Although positive growth in export sales dipped to 43%, exporters anticipate a strong rebound, with 56% expecting healthy growth next year. Cost pressures eased in manufacturing and trading, aligning with low wholesale inflation; the services sector saw stable input costs. Nonetheless, many MSMEs expect cost challenges to persist. Most businesses continue to show resilience, with the majority experiencing stable profit margins, and nearly one in five even reporting improvements. While a small portion (15%-20%) saw some pressure on profits, overall optimism remains high. Looking ahead, expectations for the next year are bright, especially in the manufacturing and services sectors, where positive momentum is expected to continue. There are signs of easing of interest burden of MSMEs, particularly in manufacturing, where the share of those reporting increase in cost of finance / interest rates fell from 41% to 33%. However, expectations of elevated finance costs persist across sectors, reflecting cautious sentiment about future interest rate trends. MSME credit availability shows mixed results. In manufacturing, more firms (92%, up from 88%) say credit is available, but many find it inadequate. In services, more MSMEs (19%, up from 13%) report difficulty in getting finance. Manufacturing MSMEs remain hopeful for better credit access due to supportive policies. There is an improvement in skilled labour availability, with optimism rising significantly across all sectors from the first round to the latest round of the survey. However, the positive responses for the future quarters fall back to level that of the previous quarter, indicating a consistent inadequacy of skilled labours. Ease of Doing Business (EoDB) indicators show improvement across parameters such as permits, electricity supply, compliance, and overall business environment. Optimism in the general outlook towards EoDB is high in one-year-ahead expectations across sectors with over 60% of respondents in each sector expecting further improvements. The survey has also assessed the Quality Control Orders (QCO) impact across MSME sectors. The findings suggest that the QCO framework has an impact on a certain section of MSMEs particularly in trading and manufacturing in terms of costs and time taken for such compliances. The survey also highlights that there remains a gap in awareness about the QCO norms and interventions are necessary in this regard.
