Business Optimism Among MSMEs Down Owing To Tariff Scenario
Availability of skilled labour remains a structural challenge despite improvements: Reports
CHENNAI: Business optimism among MSMEs dipped in July-September quarter owing to the global challenges such as US tariff measures and other external economic pressures, finds a report by SIDBI. Sales sentiment softened as only 50 per cent of trading MSMEs and 47 per cent of manufacturing MSMEs registered growth.
SIDBI’s composite MSME-Business Confidence Index (M-BCI) for July-September 2025 quarter declined to 61.64 from 63.75 in the previous quarter.
Sales sentiment softened, with only 50 per cent of trading and 47 per cent of manufacturing MSMEs noted positive growth, down from the previous quarter. Positive growth in export sales dipped to 43 per cent, while the services sector maintained its earlier momentum. Looking ahead, revenue expectations were bolstered by the festive season.
Among manufacturing MSMEs the share of those reporting increase in cost of finance fell from 41 per cent to 33 per cent. However, expectations of elevated finance costs persist across sectors. Adequacy of available credit is still a concern among MSMEs. In manufacturing, 92 per cent, up from 88 per cent in the previous quarter say credit is available, but many find it inadequate. In services, more MSMEs – 19 per cent, up from 13 per cent, report difficulty in getting finance.
While capacity utilization has moved up, the levels are still lower. In manufacturing, firms with above normal utilisation increased from 21 per cent to 25 per cent and is expected to reach 36 per cent next year. Services show a similar rise, with expectations going from 20 per cent to 30 per cent.
The Quality Control Order framework has an impact on a certain section of MSMEs, particularly in trading and manufacturing, in terms of costs and time taken for such compliances.
In the manufacturing sector, 31 per cent of respondents indicated impact from the QCOs whereas the same was higher at 37 per cent for the trading sector and 26 per cent for the services sector. On the other hand, 34 -40 per cent of respondents also indicated not being impacted by the QCOs.
