MSME Confidence Remains Above 60, Says Latest SIDBI Survey

India’s Micro, Small, and Medium Enterprises (MSMEs) entered the final quarter of 2025 with confidence largely intact.

The fifth edition of the Small Industries Development Bank of India’s (SIDBI’s) MSME Outlook Survey for October–December 2025, released on 24 February 2026, shows that overall business conditions remained in expansion territory, even as some segments slowed.

The composite MSME Business Conditions Index (M-BCI) was recorded at 60.8 in Q3 FY26, compared with 61.6 in the previous quarter. Since the index is measured on a scale where readings above 50 indicate expansion, activity continues to be on the positive side.

The headline number slipped slightly, but the underlying picture was uneven rather than weak.

Which Segments Performed Better?

Manufacturing stood out during the quarter.

The sector’s M-BCI increased to 64.1 from 62.9 earlier, indicating improved conditions compared with the previous period. Respondents from manufacturing units reported stronger sales sentiment and higher expectations for future growth.

However, trading and services did not show the same momentum. Both segments saw moderation in sentiment during the quarter. The survey does not indicate a sharp downturn, but growth impulses were less pronounced than in manufacturing.

The composite MSME Business Expectations Index (M-BEI) is projected to rise to 63.7 in the next quarter and further to 65.0 in October–December 2026. That suggests firms expect gradual strengthening rather than a sudden acceleration.

Compared with the same period a year earlier, sentiment across composite and sectoral indices has improved. The survey attributes this to domestic macroeconomic conditions and credit policy support.

What Does The Survey Indicate About Access To Finance?

Financing conditions showed clearer movement. Among manufacturing enterprises, optimism around working capital finance increased to 46%, up from 35% in the previous quarter. Sentiment on overall finance availability also rose to 47%.

The survey reveals:

• 43% exporters intend to take advantage of RBI trade assistance.
• 46% of exporters intend to use the Credit Guarantee Scheme for Exporters (CGSE). Almost 37% anticipate using both.

According to these answers, a significant number of exporters are getting ready to take advantage of the institutional assistance that is available.

What Does This Signal For Market Watchers?

In services and trading, the net response, or the difference between positive and negative responses, declined sequentially. That points to pressure on margins during the quarter.

Even so, respondents expect profitability to improve over the next year.

In the near future, 34–36% of the enterprises surveyed foresee increasing compliance expenses. Businesses also perceive potential long-term advantages in operational structure and formalisation.

Clearer instructions on certain laws (16–21%) and more robust training and awareness initiatives (17–19%) were cited by respondents as ways to facilitate the transition.

Manufacturing sentiment remains firm, and credit conditions appear to be improving in the manufacturing segment. Export support uptake may influence financing and trade-linked activity.

However, the margin trend in services and trading suggests that earnings resilience may vary across sectors.

Overall, the reading is still higher than expansion levels. Expectations are gradually rising. Some aspects of the ecosystem exhibit improvements in access to financing.

Operating circumstances are still being shaped by cost constraints and compliance changes.

The most recent survey does not indicate a spike in activity, but it also does not indicate layoffs. It seems that small firms are handling the present situation with a certain amount of assurance.

Sources:

CNBC
SME Street