Business confidence among micro, small and medium enterprises (MSMEs) remained strong in the October-December quarter, with manufacturing firms leading the sentiment, according to the first edition of the “MSME Outlook Survey” released by Sidbi last week.

The survey, covering 1,200 MSMEs across manufacturing, services and trading, tracks business sentiment through two indices: MSME-Business Conditions Index (M-BCI) for current performance and MSME-Business Expectations Index (M-BEI) for future outlook. Both indices, which range from 0 to 100, recorded readings above 50, indicating positive sentiment.

MSMEs in manufacturing showed the strongest confidence, with M-BCI of 60.33, followed by services at 59.67.

M-BEI projections indicate sustained confidence for the next four quarters, with manufacturing surpassing 70, reflecting bullish expectations on sales, profitability and financial access.

On sales growth expectations a majority foresee higher orders, production and selling prices over the next year.

The survey found rising input costs remain a concern for manufacturers, but nearly half expect increased production and higher selling prices to support profit margins.

While employment levels remained steady last quarter, 30-40 per cent of firms plan to expand their workforce, particularly in manufacturing and over 70 per cent of MSMEs expressed satisfaction with access to infrastructure, electricity and regulatory clearances, with optimism for further improvements in the year ahead.

On tech and sustainability investments, the survey found that more MSMEs are adopting digital sales channels and investing in environmental protection and new technologies.

Releasing the report, Sidbi chairman and managing director Manoj Mittal underscored the MSME sector’s role in economic growth.
"MSMEs are the backbone of India’s economy and a key driver of socioeconomic progress. This survey provides valuable insights to help policymakers and businesses navigate evolving market conditions," Mittal said.

The government’s recent recognition of MSMEs as one of the four key growth engines in the Union budget reinforces the sector’s strategic importance, he said.

FM Nirmala Sitharaman in the budget has raised investment and turnover limits for MSMEs to enhance their scale, technological capabilities and access to capital.