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MSME Sector Shows Resilience Amid Global Challenges; Policy Support Crucial

India's MSME manufacturing sector demonstrated resilience with continued expansion in the January-March 2026 quarter, though the pace of growth moderated slightly. The PHD Chamber of Commerce and Industry's survey indicates steady new orders and production levels are driving business activity. Looking ahead, the outlook for the April-June quarter remains positive, with nearly half of firms expecting stable conditions and a significant portion planning increased investment. However, maintaining this growth momentum will require timely policy support and a stable external environment.

Key Points: MSME Growth Resilient, Needs Policy Support: PHDCCI Report

  • SME Business Activity Index at 56.5 shows expansion
  • 37% of firms report increase in new orders
  • 47% of firms plan to increase capital expenditure
  • Outlook remains optimistic but slightly softer
2 min read

MSME sector stays resilient amid global headwinds; policy support key to sustaining growth: Industry

India's MSME manufacturing sector shows sustained expansion but faces moderated growth. Policy support is key to maintaining momentum, says PHDCCI survey.

"growth remains intact, the pace has moderated slightly in the face of evolving global challenges - PHD Chamber of Commerce and Industry"

New Delhi, April 20

India's MSME manufacturing sector continues to show resilience with sustained expansion, but maintaining this growth momentum will require timely policy support and a stable external environment, the PHD Chamber of Commerce and Industry said on Monday.

The PHDCCI has released the fourth round of its SME Market Sentiment Index (SMESI), which captures the performance of the manufacturing MSME sector for January-March 2026 and its outlook for the upcoming quarter.

The findings underline that while growth remains intact, the pace has moderated slightly in the face of evolving global challenges.

According to the survey, the SME Business Activity Index (SME-BAI) stood at 56.5 in the March quarter -- indicating continued expansion, though marginally lower than 58.9 recorded in the previous quarter.

Similarly, the SME Business Outlook Index (SME-BOI) came in at 58.7 for April-June 2026 -- reflecting a positive but slightly softer outlook compared to the earlier reading of 60.7.

The report highlighted that growth in business activity continues to be driven by steady new orders and production levels.

Around 37 per cent of surveyed firms reported an increase in new orders, which supported higher output during the quarter.

At the same time, employment levels and supplier delivery timelines remained largely stable, pointing to a cautious yet balanced approach by businesses amid changing conditions.

Looking ahead to the April-June quarter, the outlook remains optimistic, with 37 per cent of firms expecting further expansion in business activity.

Nearly half of the respondents anticipate business conditions to remain unchanged, as per the report.

Investment sentiment appears encouraging, with 47 per cent of firms planning to increase capital expenditure, driven by demand prospects, the report said.

Hiring trends, however, remain measured, with companies adopting a calibrated approach to workforce expansion.

This reflects a broader strategy of maintaining operational efficiency while navigating external uncertainties, the report mentioned.

- IANS

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Reader Comments

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Priya S
The resilience of our MSMEs is truly the backbone of the economy. However, the report says hiring is 'measured' – that's a polite way of saying jobs aren't growing fast enough. Stable policy is key, but we also need to ensure this growth translates into more employment, especially for our youth.
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Rohit P
Good to see the index still in expansion territory (>50). The global situation is tough for exports, so domestic demand is carrying us. More power to 'Make in India'! Hope the GST council can look at simplifying some slabs for smaller manufacturers. The compliance burden is still high.
S
Sarah B
Interesting data. The slight moderation in outlook is understandable given global headwinds. The fact that 47% plan to increase capex is a very strong signal of confidence. This optimism needs to be nurtured with consistent, long-term policy, not just short-term fixes.
K
Karthik V
As a CA advising several MSMEs in Chennai, I see the cautious optimism firsthand. Access to timely and affordable credit remains the biggest hurdle. Banks talk support but the ground reality of collateral demands hasn't changed much. Udyam registration helped, but more execution is needed.
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Nisha Z
Positive news! 👏 My textile unit has seen steady orders. The key now is to build resilience against global shocks. Diversifying supply chains and adopting digital tools for efficiency is the way forward. Hope government schemes like the MSME Champions Portal get more traction.

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