Domestic Macroeconomic Stability Lifts MSME Sentiment Despite Global Risks
New Delhi, February 24: The year-on-year analysis of the MSME Business Confidence Index for the October-December 2025 quarter shows a clear improvement at both composite and sectoral levels, even as global risks persist. According to the latest outlook survey released by the Small Industries Development Bank of India, the domestic macroeconomic environment has played a decisive role in strengthening business sentiment.The survey indicates that the availability of working capital finance and overall finance recorded the strongest gains over the past year. Sales performance and the broader business environment also improved, pointing to resilient demand conditions and a stable operating outlook for micro, small and medium enterprises.
The improvement in sentiment has been largely supported by favorable domestic macroeconomic conditions, which helped offset external headwinds.
Strong Response to RBI Trade Relief and Credit Guarantee Scheme for Exporters
MSME exporters have shown encouraging interest in policy support initiatives. Around 43 percent of respondents plan to avail themselves of the RBI Trade Relief measures, while 46 percent intend to adopt the Credit Guarantee Scheme for Exporters. Nearly 37 percent expect to use both options.These findings form part of the fifth edition of the MSME Outlook Survey, a quarterly publication by SIDBI that captures current business sentiment and forward-looking expectations among India’s MSMEs.
New Labour Codes Present Both Challenges and Opportunities
The survey notes that the new Labour Codes present an opportunity for MSMEs to strengthen operational frameworks and advance formalization.However, between 34 percent and 36 percent of surveyed firms anticipate a short-term rise in compliance costs. Many respondents identified areas where targeted support could ease the transition. Around 16 percent to 21 percent called for clearer guidance on specific provisions, while 17 percent to 19 percent highlighted the need for stronger training and awareness initiatives.
The survey underscores that focused capacity-building efforts will be critical for smooth and effective adoption of the new labour framework.
Composite M-BCI at 60.8; Manufacturing Sector Shows Clear Momentum
On a sequential basis, MSME confidence remains stable as manufacturing gains momentum. The composite MSME Business Confidence Index for the October-December 2025 quarter is estimated at 60.8.Sector-wise, manufacturing recorded an improvement in sentiment, with the index rising to 64.1 in the quarter from 62.9 in the previous quarter. In contrast, trading and services witnessed moderation.
The composite M-BCI projects a positive outlook ahead. The index is expected to rise to 63.7 in the next quarter and further to 65.0 in the October-December 2026 quarter, signaling an optimistic near-term and medium-term business outlook.
Sales and Finance Sentiment Strengthen in Manufacturing
The manufacturing sector reported stronger sales sentiment and higher expectations for future sales growth. While sales sentiment in the services and trading sectors did not show material improvement in the current quarter compared to the previous quarter, respondents in these segments remain fairly optimistic about sales prospects in the coming periods.In the October-December 2025 quarter, optimism regarding the availability of working capital finance rose sharply in manufacturing. Around 46 percent of respondents expressed positive sentiment, up from 35 percent in the previous quarter. Optimism about overall finance availability in the sector also increased to 47 percent.
In services, sentiment around finance indicators improved marginally between the quarters. For trading enterprises, sentiment regarding working capital finance moderated, even as overall finance sentiment strengthened significantly.
The survey findings reflect resilient MSME business confidence, driven primarily by domestic economic support, improved financing conditions, and growing optimism within the manufacturing segment.
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