New Delhi, Oct 27 (NationPress) The market conditions for MSMEs are expected to witness improvements in the upcoming quarter, fueled by increased domestic demand and favorable policies, including the GST reductions on a broad spectrum of products and services, as highlighted in a recent report by SIDBI.

The services sector is particularly showcasing strong prospects for future expansion.

However, the composite M-BCI for the July-September 2025 quarter saw a decline to 61.64 from 63.75 in the previous quarter, suggesting a slight decrease in confidence. Notably, manufacturing and services sectors retained a steady sense of optimism, while trading experienced more fluctuations.

On a brighter note, the composite M-BEI indicates a favorable outlook, projecting a rise to 62.26 in the next quarter and further to 66.57 one year ahead (July-September 2026), according to the Small Industries Development Bank of India (SIDBI) in its “MSME Outlook Survey.”

The sales sentiment showed a slight softening in July-September 2025, with 50 percent of trading and 47 percent of manufacturing MSMEs reporting positive growth, a drop from the previous quarter.

Meanwhile, the services sector has sustained its earlier momentum. "Looking forward, revenue expectations remain positive, especially with the festive season approaching. Despite a decline in positive growth in export sales to 43 percent, exporters are optimistic about a robust recovery, with 56 percent anticipating healthy growth next year," the report stated.

Simultaneously, cost pressures have eased in manufacturing and trading, consistent with low wholesale inflation, while the services sector experienced stable input costs. Nevertheless, many MSMEs foresee ongoing cost challenges.

Credit availability for MSMEs presents mixed outcomes. In manufacturing, a higher percentage of firms (92 percent, up from 88 percent) report that credit is accessible, yet many find it insufficient. In services, 19 percent of MSMEs (up from 13 percent) face challenges in securing financing.

Manufacturing MSMEs remain hopeful for enhanced credit access due to supportive policies, as noted in the report.

This extensive survey conducted by SIDBI gathers insights from MSMEs across manufacturing, services, and trading sectors, aiming to fill critical data gaps through both leading and lagging indicators—the MSME Business Expectations Index (M-BEI) and MSME Business Conditions Index (M-BCI).

These indices, ranging from 0 to 100, mirror MSME sentiment, where values exceeding 50 indicate a positive outlook. The M-BCI and M-BEI are based on six essential parameters: sales, profit margins, availability of skilled labor, access to working capital, overall finance, and the general business environment.