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07th April, 2025 – The Small Industries Development Bank of India (SIDBI) has released the second edition of its MSME Outlook Survey (MOS) for the quarter January–March 2025. Designed to bridge the critical data gap in the sector, the survey offers valuable insights through two key indices—the MSME Business Conditions Index (M-BCI) and the MSME Business Expectations Index (M-BEI). These indices help policymakers and stakeholders track the evolving business environment and expectations of the MSME sector. This pan-India survey has been undertaken with a well-distributed sample size of about 1200 MSMEs across regions and industries.
The survey findings reflect a broadly optimistic sentiment among MSMEs, underpinned by improved business conditions and forward-looking growth plans. The Composite M-BCI for Q4 FY25 stands at 60.82, marking an improvement from the previous quarter’s 58.30. This increase indicates a sustained healthy business environment across the manufacturing, services, and trading sectors, with sector-specific M-BCIs also showing upward movement. Looking ahead, expectations remain positive with M-BEIs for the next four quarters holding firm above 54. While the overall optimism has slightly moderated compared to the previous round—attributed to ongoing global economic uncertainties and rising tariff barriers—the sector continues to exhibit confidence in future performance.
MSMEs remain buoyant on sales growth, driven by stronger order books, increased production, and higher selling prices. A significant majority anticipates maintaining or improving profitability in Q4 FY25, despite moderate increases in input and salary costs. The outlook for profitability over the next year also remains upbeat, with MSMEs banking on higher production volumes and improved price realizations to support stable or better margins.
Employment generation continues to be a priority, with nearly one-third of the surveyed enterprises in the manufacturing and services sectors reporting increased workforce during the current quarter. Around 40% of manufacturers and 37% of service providers are also optimistic about higher employment in the fourth quarter of FY-26 i.e. one year ahead. However, concerns around the availability of skilled labour persist, with about one-sixth of respondents across sectors flagging this as a challenge.
Capital expenditure intentions present another encouraging trend, with 37% of MSMEs reporting capacity expansion during the current period and a similar proportion planning additional investments in the coming year. This investment confidence is complemented by a growing commitment to sustainability, as around 40% of MSMEs in the manufacturing and services sectors confirmed initiatives such as solar panel installation, adoption of e-vehicles, and other environmentally friendly technologies. A comparable number are also planning to invest further in green and sustainable practices.
On the financing front, access to credit remains widespread, with 80% of respondents reporting availability. However, the adequacy of this credit continues to be a concern, with 40% of manufacturing and 41% of services enterprises stating that the finance available does not fully meet their needs. Optimism around improved credit access in the year ahead is evident, but nearly 20% of MSMEs continue to express concerns. Additionally, the cost of finance remains a pressing issue, with 40% of MSMEs across sectors reporting higher borrowing costs during the survey period and an even higher percentage expecting these elevated costs to persist.
Shri Manoj Mittal, Chairman and Managing Director, SIDBI, while releasing the report, stated, “SIDBI has always played a significant role in the robust growth of the Indian MSME sector through both financial and developmental initiatives. The Quarterly Outlook Survey is another initiative to ‘understand MSMEs’ in a better manner. During a time of increased global uncertainties fuelled by unprecedented tariff barriers, MSMEs have shown remarkable resilience and pro-growth sentiments. Their plans for CAPEX, employment and adoption of sustainable and green technologies augur well for our economy. I believe that with necessary support from all the stakeholders, Indian MSMEs will remain steady on their growth track amidst the cloudy external environment.”
The second round of SIDBI’s MSME Outlook Survey reaffirms the sector’s strong fundamentals, forward-looking approach, and unwavering commitment to growth—despite external headwinds. As MSMEs continue to play a central role in job creation, investment, and sustainability, their performance remains vital to India’s broader economic progress.
The report is available at https://www.sidbi.in/uploads/
