Micro, Small, and Medium Enterprises (MSMEs) across the manufacturing, trading, and service sectors reported an improvement in business performance during the October–December 2024 quarter, according to a survey conducted by the Small Industries Development Bank of India (SIDBI).

Key findings indicate strong business confidence among MSMEs, particularly in the manufacturing sector, with optimism in sales, profitability, skilled labour availability, and access to finance for the coming quarters. The report also highlights a steady rise in digital adoption and sustainability initiatives across MSMEs.

The Manufacturing Business Confidence Index (M-BCI) recorded the highest confidence level at 60.33, followed closely by the Services M-BCI at 59.67. The Manufacturing Business Expectations Index (M-BEI) projects continued optimism for the next four quarters, with values exceeding 60 and manufacturing surpassing 70. This reflects bullish sentiment regarding sales, profitability, skilled labour availability, financial access, and overall business conditions.

A majority of MSMEs remain optimistic about sales growth, driven by positive trends in order books, production, and rising selling prices for the next quarter and beyond.

While manufacturing sector respondents anticipate an increase in input costs, nearly half expect improved profit margins over the next year due to higher production volumes and increased selling prices.

Labour productivity and skilled labour availability remain concerns, with one-sixth of respondents across all sectors expressing dissatisfaction. However, expectations for improvement in these areas remain strong. Additionally, MSMEs are looking to the Indian financial system for support, with one-third of respondents optimistic that financial institutions will meet their rising working capital needs.

Employment levels remained steady in the October–December 2024 quarter, with most businesses maintaining their workforce. However, 30–40% of respondents plan to expand their workforce in the next quarter, with stronger hiring expectations in manufacturing and a more measured outlook in trading.

The adoption of digital platforms for sales and marketing continues to rise, reflecting a shift toward digital transformation among MSMEs.

SIDBI’s First MSME Outlook Survey

“The MSME Outlook Survey is our latest initiative to bridge the data gap in the MSME sector. Through this survey, we aim to develop a lead-lag indicator in the form of the MSME-Business Expectations Index and MSME-Business Conditions Index, providing continuous insights into the sector’s performance and business sentiment,” said Manoj Mittal, Chairman and Managing Director of SIDBI.

This is SIDBI’s first-ever MSME Outlook Survey, a quarterly assessment capturing industry trends and key performance indicators. About 1,200 MSMEs engaged in non-agricultural and non-financial activities—including manufacturing, trading, and services (excluding trading)—participated in the survey. The survey covered 77 cities (Tier 1, 2, and 3) and 66 villages across India. The fieldwork was conducted between November and December 2024.

Published on February 6, 2025