MSME business confidence improves despite rising input costs, manufacturing sentiment strongest: SIDBI
Oct 25, 2026
New Delhi [India], October 25 : India's micro, small and medium enterprises (MSMEs) remain optimistic about business prospects in the coming quarters despite rising input costs, with business sentiment strongest in the manufacturing sector, according to a survey report by the Small Industries Development Bank of India (SIDBI).
The SIDBI MSME Outlook Survey Round 8 (July-September 2026) highlighted growing optimism among MSMEs about future business prospects, supported by an improvement in overall business confidence during the quarter.
“The overall confidence remains well above the neutral level of 50 across all three sectors, continuing to point to an underlying resilience in the Indian MSME ecosystem,” it said.
It noted that the MSME Business Confidence Index (M-BCI) increased to 60.4 during the July-September quarter from 59.3 in the previous quarter, indicating an improvement in business sentiment despite continued pressure from rising input costs.
Notably, across the sectors, “~49% of enterprises reported improved business conditions, while 33% indicated status quo and 18% reported softer business conditions compared to the previous quarter.”
M-BCI is a specialised economic indicator that measures the current sentiment, health, and optimism of Micro, Small, and Medium Enterprises (MSMEs).
“Future outlook remains positive, with the M-BEI at 61.7 for OctDec 2026 and 62.2 for Jul-Sep 2027, signalling sustained optimism about business prospects,” it said.
At the sectoral level, business sentiment remained strongest in manufacturing, closely followed by trading and services, according to the report.
In the manufacturing sector, the MSME Business Confidence Index rose to 61.0 from 59.5 in the previous quarter, indicating an improvement in business sentiment. Around 43 per cent of manufacturing enterprises reported positive sales growth, while the share of pessimistic responses declined to 27 per cent, reflecting a moderate improvement in sales performance during the quarter.
Further, the outlook for manufacturing MSMEs also remained positive, with the Business Expectations Index at 63.3 for October-December 2026 and rising to 64.8 for July-September 2027.
“Future expectations remain significantly upbeat, with the Manufacturing MSME Business Expectations Index (M-BEI) at 63.3 for Oct-Dec 2026 and rising to 64.8 for JulSep 2027, signalling confidence in improved business conditions ahead.”
Meanwhile, the Services MSME Business Confidence Index also improved to 61.3 from 60.4 in the previous quarter. At the same time, “Future sentiment in non-manufacturing remains positive, with expected indices of 61.1 (Trading) and 61.0 (Services) for Oct-Dec 2026; by Jul-Sep 2027.”
“Trading is expected to rise to 60.9, while expectation for Services moderates marginally to 61.1,” it said.
