India's MSME Business Confidence Improves, Expectations Index Signals Further Gains: SIDBI

New Delhi, Oct 24 (KNN) Business confidence among India’s micro, small and medium enterprises (MSMEs) improved in July–September 2026, reversing the moderation seen in recent quarters, according to a report by the Small Industries Development Bank of India (SIDBI).

The MSME Business Confidence Index (M-BCI) rose to 60.4 in the second quarter of FY27 from 59.3 in the previous quarter, remaining above the neutral level of 50 across manufacturing, trading and services.

The MSME Business Expectations Index (M-BEI) is projected to reach 61.7 in October–December 2026 and 62.2 in July–September 2027, signalling continued optimism among enterprises.

The survey covered around 1,200 MSMEs across the manufacturing, trading and services sectors.

Manufacturing, Services Lead Confidence Recovery

The manufacturing M-BCI rose to 61.0 in July–September 2026 from 59.5 in the previous quarter. Its expectations index is projected to reach 63.3 in October–December 2026 and 64.8 in July–September 2027.

The services confidence index increased to 61.3 from 60.4, while the trading index rose to 57.5 from 56.5.

For October–December 2026, the expectations indices for services and trading are projected at 61.0 and 61.1, respectively. By July–September 2027, they are expected to reach 61.1 and 60.9, respectively.

Access To Finance Remains Uneven

Access to overall finance improved for 47 per cent of manufacturing MSMEs and 44 per cent of services enterprises during the quarter. In trading, 35 per cent reported better access, with gradual improvement expected over the coming year.

Working-capital finance remained a concern, particularly in trading, where 31 per cent of enterprises reported reduced access in the quarter ended September 2026.

In manufacturing, 46 per cent of firms reported improved access to working-capital finance, compared with 38 per cent in services, where the share is expected to rise to around 40 per cent.

Sales Sentiment Improves, Margins Remain Under Pressure

Sales sentiment improved across sectors, though trading remained relatively subdued. In manufacturing, 43 per cent of enterprises reported positive sales growth, while pessimistic responses fell to 27 per cent. In services, 45 per cent were optimistic about sales, with pessimism easing to 23 per cent.

In trading, 38 per cent of MSMEs reported positive sales sentiment, while pessimistic responses rose to 22 per cent in the eighth survey round from 15 per cent in the previous round.

Profit margins remained under pressure, with 48–58 per cent of MSMEs across sectors reporting little change and 20–30 per cent reporting a decline.

The pressure was more pronounced in trading. However, 31–35 per cent of enterprises across sectors expect margins to improve over the coming year.

Skilled-Labour Availability Shows Mixed Outlook

The survey found improved skilled-labour availability across sectors during the quarter, though expectations for the coming year varied.

In manufacturing, the share of firms expecting better availability is projected to increase from 25 per cent in July–September 2026 to 40 per cent over the next year.

In services, the share is expected to ease from 40 per cent currently to 37 per cent, while in trading it is projected to fall from 42 per cent to 31 per cent.

Nearly Half Of MSMEs Report Better Business Conditions

Around 49 per cent of MSMEs reported improved business conditions in July–September 2026, while 33 per cent said conditions were unchanged and 18 per cent reported a deterioration from the previous quarter.

SIDBI’s M-BCI tracks current-quarter business conditions, while the M-BEI measures enterprises’ expectations for future quarters.

The report attributed the sector’s resilience to improved business confidence, sales sentiment and access to finance, despite continued challenges in working-capital availability and profit margins.

(KNN Bureau)