India’s MSMEs Signal Resilience: SIDBI Survey Reveals a Sector on the Rise

What happens when a nation’s most hardworking businesses—its small and medium enterprises—decide not to buckle under global pressures, but instead, turn headwinds into tailwinds? The latest MSME Outlook Survey by the Small Industries Development Bank of India (SIDBI) paints a powerful picture of India’s MSMEs doing just that.

In a time when rising trade barriers, inflation concerns, and international market turbulence could have easily subdued spirits, the MSME sector in India is scripting a story of resilience, renewed growth, and strong belief in the future. SIDBI’s second edition of the MSME Outlook Survey (MOS), covering the January–March 2025 quarter, brings to light this very sentiment—of optimism holding firm even amid uncertainty.

A Pulse on MSMEs: Measuring Mood and Momentum

To understand the real-time mood of the MSME sector, SIDBI introduced two indices:

• MSME Business Conditions Index (M-BCI)

• MSME Business Expectations Index (M-BEI)

Both indices are based on pan-India responses from around 1,200 MSMEs across manufacturing, services, and trade. They serve not just as data points, but as crucial indicators of India’s grassroots economic sentiment.

And the numbers speak volumes.

The Composite M-BCI jumped to 60.82 in Q4 FY25 from 58.30 in the previous quarter—a clear sign that business conditions have improved across segments. Meanwhile, M-BEI figures holding firm above 54 indicates MSMEs continue to stay hopeful about what lies ahead.

Orders Up, Margins Hold, Confidence Soars

So, what’s driving this positive outlook?

For one, order books are filling up. MSMEs are reporting better production runs, higher selling prices, and overall sturdier sales pipelines. This trifecta has enabled many businesses to maintain, and in some cases, even expand their profit margins, despite modest rises in input and labor costs.

The outlook for FY26 appears even more promising—with businesses expecting better margins, higher sales, and an uptick in capacity utilization. These are not just numbers, but signals that India’s MSMEs are prepared to grow stronger, not slower.

More Jobs, Greener Plans: MSMEs Push Forward

While the headlines may often focus on startups and unicorns, it is MSMEs that continue to shoulder a significant portion of India’s employment engine.

In this quarter alone, about one-third of MSMEs in manufacturing and services expanded their workforce. And they’re not stopping. Projections show 40% of manufacturers and 37% of service providers intend to hire more in Q4 FY26. That’s big.

However, one challenge persists: finding skilled manpower. Roughly one-sixth of respondents pointed to a growing gap in skilled labor—a reminder that India’s skilling ecosystem needs to scale alongside industry.

On the expansion front, MSMEs are investing with purpose. About 37% undertook capacity expansions this quarter, and similar plans are on the horizon. What’s especially heartening is the sector’s growing alignment with sustainability goals.

Around 40% of MSMEs in manufacturing and services are already implementing green initiatives—from solar panels and EVs to eco-conscious technologies. It’s clear: sustainability is no longer a buzzword but a boardroom priority.

Credit Access: Widely Available, Yet Not Fully Adequate

One of the most closely-watched parameters in any MSME study is credit access—and the survey doesn’t shy away from the reality.

While a reassuring 80% of MSMEs reported access to credit, concerns about the adequacy and affordability of that credit loom large. Roughly 40% of manufacturers and 41% of service providers believe their current financing doesn’t meet their actual needs.

High borrowing costs are another pain point. Nearly 40% flagged rising interest rates, and many anticipate these costs to remain elevated in the near future—potentially impacting their ability to scale or invest in tech and talent.

Summing up the findings, Manoj Mittal, CMD, SIDBI, emphasized the resilience of Indian MSMEs and reiterated SIDBI’s role in their journey.

“Despite global uncertainties and increasing tariff barriers, MSMEs have shown resilience and pro-growth sentiments. Their focus on capital expenditure, employment, and sustainability reflects positively on our economy,” Mittal said.

He added that SIDBI remains committed to empowering this segment through both financial and developmental support. The quarterly survey is just one of many efforts to listen to and act upon the sector's needs.

Why This Survey Matters: The Bigger Picture

This isn’t just another survey—it’s a timely reminder of how critical MSMEs are to India’s growth engine. In a country where over 63 million MSMEs employ more than 110 million people, their outlook isn’t just about business—it’s about livelihoods, innovation, and national progress.

The insights from this survey should serve as a wake-up call for policymakers, lenders, and even large corporations to rally behind MSMEs. Their confidence is not misplaced—it’s built on performance, preparation, and purpose.

The story of India’s economic future is incomplete without its MSMEs. As this survey shows, they’re not just surviving global shocks—they’re adapting, evolving, and investing in the future.

From hiring more talent to going green and boosting production, India’s MSMEs are proving that size doesn’t limit ambition.

And as long as they continue to believe, build, and break barriers, the rest of the ecosystem—startups, investors, governments—should pay close attention.