Micro, small, and medium enterprises in India continue to show declining confidence amid rising costs and subdued demand, though future optimism remains strong, according to SIDBI survey.
India’s micro, small and medium-sized enterprises have seen business confidence soften for a fourth straight quarter, with the latest SIDBI survey showing that rising costs and weaker demand are continuing to weigh on sentiment. The Small Industries Development Bank of India said the MSME Business Confidence Index slipped to 59.3 in April-June 2026 from 59.8 in the previous quarter, extending a gradual decline from 63.8 a year earlier.
Even so, the reading remained above the 50-point mark that separates expansion from contraction, suggesting the sector is still growing, albeit more cautiously. SIDBI’s earlier rounds show a similar pattern of moderation: confidence eased to 60.8 in October-December 2025 and 59.8 in January-March 2026 after a stronger 60.82 in the final quarter of FY2025, when optimism had improved across manufacturing, trading and services.
The latest survey, based on responses from about 1,200 MSMEs, found that the slowdown in confidence was broad-based. Manufacturing edged down to 59.5 from 60.1, trading slipped to 56.5 from 57.2 and services fell to 60.4 from 60.8. SIDBI said sales sentiment weakened across the sector, while profit margins stayed under pressure, with only a minority of firms reporting improvement and many saying margins were unchanged. Skilled labour availability was also a concern, particularly in manufacturing and services.
Access to finance was relatively steady, but the outlook for future business conditions remained positive. SIDBI said the MSME Business Expectations Index stood at 60.1 for July-September 2026 and 61.2 for April-June 2027, pointing to continued optimism even as current conditions remain subdued. Manufacturing expectations were especially firm, with the index projected at 61.2 and 63.4 for those periods, respectively. The broader picture in SIDBI’s July MSME Pulse report also suggests the sector continues to expand: combined commercial and individual business borrowing stood at ₹65.8 lakh crore as of March 2026, underlining the scale of credit activity supporting the segment.
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