Feb 24: The Small Industries Development Bank of India (SIDBI) has released the fifth edition of its “MSME Outlook Survey,” a quarterly publication that provides key insights into the current business sentiment and future outlook among Indian Micro, Small, and Medium Enterprises (MSMEs). These are captured 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 expansionary outlook.
- MSME confidence remains sequentially stable as manufacturing gains momentum; optimistic outlook across sectors: The composite M-BCI for October-December 2025 quarter stood at 60.8 marginally lower than the previous quarter at 61.6. Sector-wise, manufacturing witnessed improvement in the sentiment with M-BCI rising to 64.1 in the quarter from 62.9 in the previous quarter while trading and services witnessed moderation.
The composite M-BEI projects a positive outlook, with the composite index expected to rise to 63.7 in the next quarter and further to 65.0 in the quarter one-year ahead (October-December, 2026) signaling an optimistic business outlook in the near term.
- Broadbased and healthy sales growth expectations: The manufacturing sector witnessed stronger sales sentiment and higher expectations for future sales growth. While sales sentiments don’t reveal any material improvement in the current quarter (Oct-Dec’2025) compared to the previous quarter in the services and trading sectors, respondents remain fairly optimistic about sales prospects in the forthcoming periods.
- Improving trend in access to finance: In the current quarter, optimism about availability of working capital finance rose significantly, with 46% of manufacturing respondents expressing positive sentiment; an increase from 35% in the previous quarter. Similarly, optimism regarding overall finance availability in that sector improved to 47%. In case of services, sentiments on finance indicators improved marginally between the quarters; for trading enterprises, however, sentiment around working capital finance moderated, even as sentiments regarding overall finance strengthened significantly.
- Some concerns on profit margins particularly in services and trading sectors: While a majority of respondents continue to report stable margins across sectors, the Net Response (difference between the share of positive and negative responses) has declined or turned negative compared to the previous quarter for services and trading businesses, reflecting some concerns on profitability. Nevertheless, respondents anticipate an improvement in the year ahead, with the outlook being particularly stronger for the services sector.
- YoY improvement in sentiments driven by a favourable domestic macroeconomic environment despite the external headwinds and supportive policies on credit access: A year-on-year analysis of the MSME Business Confidence Index (M-BCI) at both composite and sectoral levels indicates an improvement over the last one-year period. Availability of working capital finance and overall finance recorded the strongest improvement; sales/revenue and overall business scenario also improved, indicating resilient demand and a stable operating outlook.
- Exporters show strong interest in RBI and CGSE support measures: Through the survey, MSME exporters have shown encouraging interest in policy support measures viz., RBI Trade Relief measures & Credit Guarantee Scheme for Exporters (CGSE) with 43% of respondents plan to avail RBI’s Trade Relief, 46% of respondents intend to adopt CGSE while ~37% of respondents expect to use both options.
- New labour codes can help MSMEs take formalization of their businesses to the next level: The new labour codes offer MSMEs an opportunity to strengthen their operational frameworks and advance formalisation. While 34–36% of surveyed firms anticipate a short-term rise in compliance costs, many also identified areas where targeted support could ease the transition—particularly clearer guidance on specific provisions (16–21%) and stronger training and awareness initiatives (17–19%). Focused capacity-building will be essential for smooth and successful adoption.
