New Delhi, Jan 13 (NationPress) The MSME sector in India is displaying early signs of recovery, with nearly 80% of businesses indicating enhanced performance recently and an impressive 86% anticipating growth in 2026, according to a report released on Tuesday. The report from the SME-focused NBFC NeoGrowth highlights a wave of optimism fueled by robust festive sales, better cash flow, and advantages from GST 2.0.

A survey conducted across more than 2,000 MSMEs in over 25 cities revealed that more than 71% of these enterprises intend to either expand their existing stores or open new locations, while 30% plan to introduce new products or brands. This indicates a transition from short-term recovery to a more confident medium-term outlook, as stated in the report.

Analysis at city and sector levels indicates that optimism is most pronounced in consumer-oriented sectors, where visibility of demand has improved. Leading industries include beauty, wellness, automobile, and food & beverage, according to the report.

“This study reveals early signs of growth within the MSME sector. The demand during festive seasons, combined with increased adoption of digital payments and benefits from GST 2.0, has begun to bolster business momentum. The measured confidence among MSMEs regarding their growth plans is noteworthy,” stated Arun Nayyar, Managing Director and CEO of NeoGrowth.

MSMEs' expectations from the 2026 Budget are centered around initiatives that enhance operational ease and continuity. Businesses have prioritized timely access to working capital and smoother, faster access to existing government schemes. Approximately 25% of MSMEs emphasized the necessity for quicker and improved access to government programs, alongside ongoing simplification of GST and compliance processes.

Merchant-led digital transactions experienced a surge during the festive period, with UPI processing a record ₹27.28 lakh crore across 20.7 billion transactions in October, enhancing cash flow visibility for MSMEs, as per the report.

This uplift driven by festive demand, supplemented by GST 2.0 rate rationalization, has mitigated pricing pressures across essential consumption categories and contributed to improved revenue realization.

More than half of the surveyed MSMEs intend to pursue business loans in 2026 for purposes such as expansion, inventory accumulation, and working capital, with a pronounced credit interest in sectors like electronics, mobile, and personal services, the report noted.