MSME confidence in 'expansionary' phase despite global volatility: Report
New Delhi, Aug 7
The MSME Business Confidence Index stood at 59.3 for the April‑June 2026 quarter, compared to 59.8 in the previous quarter, remaining comfortably above the 50‑mark and signalling "business confidence remains in expansionary territory despite the uncertain global environment," a report said on Friday.
The report from Small Industries Development Bank of India (SIDBI) said that profitability also remained largely stable across sectors. Most enterprises reported no significant change in profit margins during the quarter.
The MSME Business Expectations Index for July‑September 2026 was 60.1 and is expected to improve to 61.2 for April‑June 2027, "indicating sustained optimism about business prospects over the coming year."
Meanwhile, 21 per cent of manufacturing enterprises, 20 per cent of trading enterprises and 22 per cent of services enterprises reported an improvement in net profit margins, even as 20 per cent to 30 per cent of businesses across sectors reported a decline, indicating that margin pressures continue for some MSMEs.
The survey showed that MSMEs continue to face challenges such as cost pressures, demand concerns and shortage of skilled labour, but the overall mood across the sector remains positive.
Businesses have reported stable sales, steady profit margins and continued access to finance, while expectations for the coming quarters remain encouraging.
Sales sentiment remained broadly positive across manufacturing, trading and services. While manufacturing and services enterprises became slightly more cautious than in the previous survey round, trading enterprises performed better, with fewer businesses reporting a pessimistic outlook.
Around 20 per cent of respondents in the manufacturing and services sectors reported a deterioration in the availability of skilled workers. However, most enterprises said labour availability remained stable or improved during the quarter, although a section expects skill shortages to continue.
Most enterprises reported steady availability of working capital finance during the quarter. While manufacturing enterprises expect some moderation going forward, businesses in the services and trading sectors expect working capital availability to improve.
— IANS
Reader Comments
Happy to hear trading sector is doing better! My family runs a textile wholesale business in Surat and we've definitely seen stable sales this quarter. The access to finance has improved thanks to digital lending platforms. Hope this optimism continues. 💪
Interesting data from SIDBI. The skill shortage issue is a big red flag though - 20% reporting deterioration in skilled labour availability is significant. As someone who works with Indian suppliers, I've seen how this bottleneck affects quality and delivery timelines. The government needs to invest more in vocational training.
The "expansionary" confidence is good news, but let's be honest - the smaller MSMEs in Tier 2 and 3 cities still struggle with compliance and working capital. The report shows some improvement, but there's a long way to go. Would love to see more state-level initiatives for local businesses.
The index staying at 59.3 is a solid signal. I've been tracking Indian MSME sector for years and the resilience here is remarkable compared to other emerging markets. The real challenge will be sustaining this if global demand weakens further. Hopefully the government continues the PLI schemes and export incentives.
Skill shortage is a real pain point. We run a small auto components unit in Chennai and finding trained welders and CNC operators is getting harder every year. The "Make in India" push is great, but who will actually operate the machines? 😅 Need more ITIs and industry-academia partnerships urgently.
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