Context:
The Small Industries Development Bank of India (SIDBI) released the third edition of its “MSME Outlook Survey”, revealing a positive trend in capacity utilisation among Micro, Small, and Medium Enterprises (MSMEs) during the first quarter of FY2025–26.
Key Highlights:
Business Sentiment and Confidence Index
- Composite MSME Business Confidence Index (M-BCI): Rose to 63.75 in Q1 FY26 from 60.82 in the previous quarter.
- Index >50 indicates positive sentiment.
- MSME Business Expectations Index (M-BEI):
- 62.19 for July–September 2025
- 67.88 for Q1 FY27
- Indicates continued optimism despite global trade challenges.
Sectoral Trends
- Manufacturing and Trading MSMEs led confidence gains.
- Services sector remained stable, with a slight dip in optimism.
Capacity Utilisation
- Around 21% of manufacturing and 20% of services MSMEs reported above-normal capacity utilisation.
- Up from 12–14% in the previous quarter, showing a sharp uptick in operational activity.
Access to Finance
- 88% of respondents reported improved access to finance, compared to 79% previously.
- Indicates improved credit availability and financial conditions.
Sales and Profitability
- Over 50% of MSMEs experienced a rise in sales and profits.
- Profit margins improved despite persistent cost pressures.
Borrowing Costs and Monetary Policy Transmission
- Fewer MSMEs reported rising borrowing costs.
- Suggests early signs of transmission from the 100 bps repo rate cut by RBI since February 2025.
Export Concerns
- 40% of exporting MSMEs reported adverse impacts from tariff-related uncertainties.
- Highlights global trade tensions as a significant headwind.
About the Survey
- Conducted by: Small Industries Development Bank of India (SIDBI)
- Edition: Third
- Sample Size: 1,200 MSMEs
- Scope: Manufacturing, Services, and Trading sectors
- Purpose: Track business sentiment and operational trends in the MSME segment.
