New Delhi, Oct 27 (UNI) Micro, Small and Medium Enterprises (MSEs) in India continue to demonstrate resilience even as overall business optimism moderated during the July to September 2025 quarter.
The fourth round of the MSME Outlook Survey released by the Small Industries Development Bank of India (SIDBI) covering 1,200 MSMEs across manufacturing, services, and trading measures business confidence through two indices: the MSME Business Conditions Index (M-BCI) and the MSME Business Expectations Index (M-BEI). Both indices range from 0 to 100, with readings above 50 signalling positive sentiment.
For the July-September 2025 quarter, the composite M-BCI eased to 61.64 from 63.75 in the previous quarter, indicating a slight dip in current confidence levels. However, future sentiment remains upbeat, with the M-BEI expected to rise to 62.26 in the next quarter and 66.57 by the same period next year, reflecting optimism about stronger domestic demand and policy support, including recent GST rate cuts.
While manufacturing and services maintained steady optimism, the trading sector showed greater volatility. Sales sentiment softened modestly, with 50% of trading and 47% of manufacturing MSMEs reporting positive growth, a decline from the previous quarter. The services sector held its ground, supported by festive demand and stable revenues.
Export sentiment weakened slightly, with only 43% reporting positive growth, though 56% expect a rebound next year. Cost pressures eased across most sectors amid low wholesale inflation, while profitability remained largely stable with one in five MSMEs even reporting improved margins.
Access to finance improved in manufacturing, with 92% of firms reporting credit availability (up from 88%), though adequacy remains an issue. In services, 19% of MSMEs reported difficulty accessing finance, up from 13% previously.
Signs of easing borrowing costs emerged, particularly in manufacturing, where firms reporting higher finance costs dropped from 41% to 33%.
Skilled labour availability showed steady improvement across sectors, but expectations for future quarters remain subdued, indicating persistent workforce gaps. Capacity utilisation also strengthened.
In manufacturing, firms with above-normal utilisation rose from 21% to 25%, and are expected to reach 36% next year. The services sector shows a similar trajectory, with 42% of firms expanding capacity this quarter and more planning additions next year.
Indicators of Ease of Doing Business (EoDB) improved across parameters such as permits, electricity supply, and compliance. Over 60% of respondents across sectors expect further improvements next year.
The survey also assessed the impact of Quality Control Orders (QCOs), noting that compliance costs and time requirements affected certain manufacturing and trading MSMEs. A gap in awareness of QCO norms was also observed, prompting calls for more outreach and guidance.
