MSME Sector Revival: How GST Cuts and Festive Demand Boost Growth

The services sector, in particular, is showing robust expectations for future growth.

Meanwhile, the composite M-BCI for the July-September 2025 quarter declined to 61.64 from 63.75 in the previous quarter, indicating a modest dip in confidence. At the same time, sector-wise, manufacturing and services maintained steady optimism, while trading showed more volatility.

However, the composite M-BEI projects a positive outlook, with the composite index expected to rise to 62.26 in the next quarter and further to 66.57 in the quarter one year ahead (July-September, 2026), the Small Industries Development Bank of India (SIDBI) said in its "MSME Outlook Survey,".

Sales sentiment softened modestly in July-September 2025, with 50 per cent of trading and 47 per cent of manufacturing MSMEs noting positive growth, down from the previous quarter.

The services sector maintained its earlier momentum. "Looking ahead, revenue expectations remain upbeat, bolstered by the festive season. Although positive growth in export sales dipped to 43 per cent, exporters anticipate a strong rebound, with 56 per cent expecting healthy growth next year," the report added.

Meanwhile, the cost pressures eased in manufacturing and trading, aligning with low wholesale inflation; the services sector saw stable input costs. Nonetheless, many MSMEs expect cost challenges to persist.

MSME credit availability shows mixed results. In manufacturing, more firms (92 per cent, up from 88 per cent) say credit is available, but many find it inadequate. In services, more MSMEs (19 per cent, up from 13 per cent) report difficulty in getting finance.

Manufacturing MSMEs remain hopeful for better credit access due to supportive policies, the report added.

This comprehensive pan-India survey done by SIBDI captures the perspectives of MSMEs operating across manufacturing, services, and trading sectors and aims to bridge critical data gaps through a lead as well as a lag indicator -- the MSME Business Expectations Index (M-BEI) and MSME Business Conditions Index (M-BCI).

These indices, which range from 0 to 100, reflect MSME sentiment, with values above 50 indicating a positive outlook. The M-BCI and M-BEI are derived from six key parameters: sales, profit margins, availability of skilled labour, access to working capital and overall finance, and the overall business situation.

- IANS