MSME Sector Shows Strong Business Confidence in Q3 FY2025: SIDBI Survey SIDBI's MSME Outlook Survey offers valuable insights into the sector's evolving dynamics, reinforcing the crucial role of MSMEs in India's economic growth. With strong business confidence and an optimistic outlook, MSMEs are poised to paving the way for a more resilient and self-reliant economy.
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MSMEs cover a wide spectrum of enterprises across India, including urban and rural businesses and from all over the country. The micro, small, and medium enterprise (MSME) sector in India has demonstrated a positive business sentiment in the third quarter of FY2025, as revealed by the Small Industries Development Bank of India's (SIDBI) MSME Outlook Survey (MOS).
The survey saw participation from approximately 1,200 MSMEs engaged in manufacturing, trading, and services (excluding trading). Conducted across 77 cities (spanning Tier 1, 2, and 3 locations) and 66 villages, the survey aims to fill the crucial data gap in the sector by producing the MSME Business Conditions Index (M-BCI) and MSME Business Expectations Index (M-BEI).
Positive business sentiment
One of the revelations from the survey is the strong business confidence exhibited by MSMEs. The Business Conditions Index (BCI) for Q3 FY2025 was recorded at 58.30, signaling a positive outlook. This index, ranging from 0 to 100, indicates favorable business sentiment when above 50, while values below 50 suggest a downturn.
Manufacturing MSMEs emerged as the most confident, with their BCI at a robust 60.33. The services sector followed closely with a BCI of 59.67, while traders also reported positive sentiment with a BCI of 52.50, indicating moderate improvement.
The manufacturing sector, in particular, showed optimism, as reflected in the Manufacturing Business Conditions Index (M-BCI Mfg) at 60.33. This strong score underscores the sector's resilience and potential for further growth. Additionally, the MSME Business Expectations Index (M-BEI Mfg) for the next year projects a steady improvement, suggesting that manufacturing enterprises anticipate better business conditions and growth opportunities in the coming months.
"Majority of respondent MSMEs engaged in manufacturing activity displayed positive sentiment on sales growth, with the share of optimistic responses rising from 50 per cent in the Oct-Dec 2024 quarter to 58 per cent in the following quarter and further to 68 per cent in the quarter a year ahead," the report stated.
Speaking about the significance of the survey, SIDBI CMD Manoj Mittal stated, "The MSME Outlook Survey, our latest initiative, attempts to bridge the data gap in the MSME sector. The goal of the survey is to develop lead and lag indicators in the form of the MSME Business Conditions Index and MSME Business Expectations Index, providing steady insights into the sector's performance and perceptions."
He further elaborated that the survey captures MSMEs' assessment of current business conditions and future expectations across 22 critical parameters, including employment generation, capacity addition, access to finance, cost of funds, and ease of doing business. "This pan-India survey presents a true and fair picture of the MSME sector's performance, helping to chart a roadmap towards a 'Viksit Bharat' (Developed India)," he added.
