SIDBI launches MSME Outlook Survey on business confidence

SIDBI has introduced its first-ever MSME Outlook Survey, analyzing business sentiment for the October-December 2024 quarter. Covering 1,200 MSMEs across manufacturing, services, and trading, the survey evaluates key parameters such as sales growth, profitability, employment trends, and financial access.

The Small Industries Development Bank of India (SIDBI) has introduced its first-ever MSME Outlook Survey, a quarterly assessment of MSME business sentiment for the October-December 2024 period. This survey aims to provide a comprehensive analysis of key business indicators across the sector.

Based on responses from 1,200 MSMEs spanning manufacturing, services, and trading, the report evaluates 22 critical business parameters, including sales growth, profitability, employment trends, access to finance, cost of funds, and ease of doing business. Covering 77 cities across Tier 1, 2, and 3 regions, as well as 66 villages, the survey ensures broad representation of MSMEs across India.

Key findings suggest strong business confidence, particularly in the manufacturing sector, where optimism is high regarding sales, profitability, skilled labor availability, and financial access. Additionally, the survey highlights a steady rise in digital adoption and sustainability efforts among MSMEs.

Key Survey Findings

• MSMEs across manufacturing, trading, and services reported improved business performance during the October-December 2024 quarter. Manufacturing MSMEs expressed the highest confidence, with the Manufacturing Business Confidence Index (M-BCI) registering a strong reading of 60.33, followed closely by the Services M-BCI at 59.67.
• The MSME Business Expectations Index (M-BEI) indicates sustained optimism for the next four quarters, with indices remaining above 60 and manufacturing exceeding 70. This reflects positive expectations regarding sales, profitability, skilled labor availability, financial access, and overall business conditions. Most MSMEs foresee sales growth driven by strong order books, higher production, and rising selling prices in the upcoming quarter and the year ahead.
• Manufacturing respondents anticipate an increase in input costs. However, nearly half expect higher production volumes and increased average selling prices to result in greater profit margins in the next year.
• Around one-sixth of MSMEs across all sectors expressed dissatisfaction with labor productivity and skilled labor availability during the survey period. However, they anticipate improvements in these areas over the next year.
• The employment scenario remained stable during the October-December 2024 quarter, with most respondents maintaining their current workforce levels. Looking ahead, 30-40% of MSMEs plan to expand their workforce in the next quarter. This hiring optimism is particularly strong in manufacturing, while trading businesses show a more measured outlook.
• The adoption of digital platforms for sales and marketing continues to grow, with a rising number of MSMEs expressing interest in leveraging digital tools for business expansion.
• The survey also indicates a growing willingness among MSMEs to invest in environmental protection measures and adopt new technologies to enhance sustainability.
• Respondents across all sectors remain optimistic about infrastructure access, electricity supply, and the time and effort required for permits and clearances. More than 70% expressed satisfaction with these factors, while 15% noted improvements in the October-December 2024 quarter. The share of businesses expecting further enhancements in these areas over the next year has also increased.

SIDBI’s Commitment to MSME Growth

Manoj Mittal, Chairman and Managing Director of SIDBI, emphasized the crucial role of MSMEs in India’s economy, stating, “MSMEs serve as the crucial foundation of the Indian economy and a powerful instrument for bringing about socioeconomic change. SIDBI has always acknowledged the incredible contribution of MSMEs in India’s growth story and is committed to the development of the sector through both financial and non-financial initiatives. The importance given to this sector by GOI is also evident from the fact that it has been identified as one of the four growth engines of the economy during the recent union budget. I firmly believe that the continuous flow of quality information on MSMEs through this survey will help all stakeholders in evaluating the current business climate and fine-tune their respective approaches.”

By capturing valuable insights from MSMEs nationwide, SIDBI’s MSME Outlook Survey serves as a vital tool for policymakers, industry leaders, and financial institutions to assess the sector’s evolving landscape and drive targeted support initiatives.