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New Delhi, Oct 28 (KNN) India’s micro, small and medium enterprises (MSMEs) remain broadly optimistic about business prospects, supported by robust domestic demand, easing input cost pressures, and policy support such as reductions in goods and services tax (GST) rates, according to a survey by the Small Industries Development Bank of India (SIDBI). The quarterly survey, covering 1,200 MSMEs across the manufacturing, services, and trading sectors, assessed business performance and sentiment across parameters such as sales, profit margins, skilled labour availability, and access to finance, Business Standard reported. Sales sentiment moderated slightly in the July–September quarter (Q2 FY26), with 50 percent of trading and 47 percent of manufacturing MSMEs reporting positive growth—marginally lower than in the previous quarter. The services sector continued to perform strongly, and firms expect revenues to rise further during the festive season. Export optimism weakened, with 43 percent of firms reporting higher export sales, though 56 percent expect growth to improve in 2026. Input cost pressures eased for manufacturing and trading MSMEs amid low wholesale inflation, while the services sector reported stable costs. Despite the easing trend, many businesses remain cautious about potential price challenges. Profitability across sectors largely held steady, with nearly one in five MSMEs reporting better margins. Around 15–20 percent of respondents, however, continued to face some pressure on profits. Overall optimism about business performance next year remains high, particularly in manufacturing and services. The survey also noted an easing of financing costs, especially in manufacturing, where the share of firms reporting higher interest expenses declined from 41 percent to 33 percent. However, uncertainty about future interest rate trends has kept expectations of elevated borrowing costs intact. Access to credit continues to vary across sectors. About 92 percent of manufacturing MSMEs said credit was available, though several considered it insufficient, while 19 percent of service-sector firms reported difficulties in obtaining finance. Manufacturers expressed confidence that ongoing policy measures would further improve credit flows. Labour conditions showed signs of improvement, with increased availability of skilled workers across sectors. Nonetheless, shortages remain a persistent concern. Capacity utilisation also rose, with 25 percent of manufacturing and 20 percent of services firms reporting above-normal utilisation levels. Around 42 percent of manufacturing and 35 percent of services firms expanded capacity during the quarter. On the ease of doing business, MSMEs reported continued progress in areas such as permits, electricity supply, and regulatory compliance. More than 60 percent of respondents across sectors expect further improvement in the coming year, the survey said.
