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India Q2 Surveys Show Softer Business Confidence and Upbeat MSME Outlook

New US tariff actions weighed on current conditions, with surveys pointing to improving capacity use alongside stronger demand prospects.

Overview

  • SIDBI’s MSME Business Conditions Index slipped to 61.64 in July–September from 63.75, indicating a modest dip in current sentiment.
  • NCAER’s Business Confidence Index eased to 142.6 in Q2 FY26 from 149.4 in Q1, with macro components softening but capacity utilisation improving.
  • Both surveys linked the moderation to global uncertainties tied to US trade measures, even as domestic GST changes were noted in the background.
  • MSMEs remained resilient compared with large firms: NCAER found MSME BCI roughly flat near 138, while large-firm BCI fell to 149.9 from 171.6.
  • Sales and export sentiment softened for MSMEs, finance costs eased in manufacturing with adequacy concerns persisting, and capacity utilisation strengthened with further gains expected.