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SIDBI launched “MSME Outlook Survey" - a quarterly report on MSME Business Sentiment. On the basis of a survey of MSMEs spread across Manufacturing, Services and Trading sectors, the report attempts to bridge the data gap in the MSME sector by developing a lead + lag indicator, in the form of MSME-Business Expectations Index (M-BEI) and MSME-Business Conditions Index (M-BCI), that provide a steady flow of insights into the current performance of MSMEs in India and their perception.

The Survey is in-depth and captures MSMEs’ assessment of current business situation and future expectations on 22 parameters ranging from business performance to availability of skilled labour, employment generation, capacity addition, financial access, cost of funds and ease of doing business. This pan-India survey with a sample size of about 1200 MSMEs captures sentiments of MSMEs across regions and industries. 

The Survey generates two indices, (M-BCI) and (M-BEI), which are essentially weighted averages of the responses from MSMEs on six specific performance parameters – sales growth, profitability, availability of skilled labour, access to finance, cost of finance and overall business situation. While the M-BCI is an indicator of the sentiment of the MSMEs during the survey period, i.e. October-December 2024, M-BEI indicates the future sentiments of the MSMEs based on expectations on the above parameters captured for the next four quarters. The M-BCI and M-BEI are diffusion indices that ranges from 0 to 100, where scores above 50 indicate positive sentiment and scores below 50 suggest negative sentiment.    

The key findings of the survey are mentioned below:

1. MSMEs across manufacturing, trading and services (other than trading) sectors noted an uptick in their business performance in the period October-December 2024. The MSMEs engaged in manufacturing activity were most positive with the M-BCI for the Manufacturing sector exhibiting the strongest business confidence reading of 60.33, closely followed by the Services M-BCI at 59.67.

2. M-BEI projects consistent optimism for the next four quarters, with indices above 60 and manufacturing even above 70, reflecting bullish sentiment on parameters like sales, profitability, and expectations of improved availability of skilled labour, access to finance and overall business situation.

3. Majority of MSMEs are optimistic on sales growth buoyed by positive sentiment on order books, production and rise in selling price for the next quarter and a year ahead as well.

4. Respondents in the manufacturing sector are expecting rise in input costs. However, with higher production quantity and increase in average selling price, about half of them expecting an increase in the profit margin a year ahead.

5. About a sixth of the respondents in all sectors were not happy with the labour productivity and availability of skilled labour during the survey period. However, they expect the same to improve in the year ahead.

6. Employment scenario was broadly steady in the Oct-Dec 2024 quarter with majority of respondents’ employee strength remaining unchanged. The expectations on the future, however, are bullish with 30-40% planning to increase their workforce in the next quarter. The optimism is more pronounced in the manufacturing sector and relatively sedate in trading.

7. The share of responses in favour of adoption of digital modes for selling & marketing rising steadily going forward.

8. The share of positive responses towards willingness to invest in environmental protection measures and adopting new technologies is rising going forward.

9. Survey participants from all sectors are optimistic about access to infrastructure, supply of electricity and reduced time and efforts to obtain permits and clearances. More than 70% of the participants in all sectors were satisfied with the time and effort taken to obtain permits & clearances and supply of electricity, while about 15% reported improvement in these parameters in the Oct-Dec 2024 quarter. The share of respondents expecting improvement on these parameters a year ahead from now also rises across the sectors.

Shri Manoj Mittal, Chairman and Managing Director, SIDBI while releasing the report said “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.”   

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