India’s micro, small, and medium enterprises (MSME) sector displayed notable resilience during the July-September quarter, according to the latest MSME Outlook Survey released by the Small Industries Development Bank of India (SIDBI), despite facing tariff challenges imposed by the Trump administration.
The survey confirmed sustained growth across the board, as all three key sectoral indices — manufacturing, services, and trading- remained well above the expansion threshold of 50, indicating continued growth momentum.
While overall business optimism among MSMEs moderated slightly due to external pressures like US tariff measures, the core activity indicated steady progress, reflecting the adaptability and strength of Indian MSMEs.
The report said, “MSMEs continue to show resilience with all three sectoral indices in manufacturing, services and trading well above the expansion threshold of 50,” ANI reported.
Outlook of MSME sector’s growth
The survey data revealed a positive outlook for the MSME sector, with the composite MSME Business Expectations Index (M-BEI) expected to rise to 62.26 in the next quarter. Analysts project the index to reach 66.57 in the quarter one year ahead (July-September 2026).
This optimism is supported by anticipated stronger domestic demand and favourable government measures, such as the reduction in Goods and Services Tax (GST) on various products and services. The services sector, in particular, is expected to experience robust future growth, ANI reported.
The GST reduction came into effect on 22 September. The reform aimed to simplify the previous four-slab system, boosting consumer spending, easing business operations, and driving economic growth throughout the country.
Current sales and export performance
Despite overall sectoral growth, sales sentiment softened slightly in the July-September 2025 period. Around 50% of trading and 47% of manufacturing MSMEs reported positive growth, a minor dip from the previous quarter. Meanwhile, the services sector maintained its previous momentum.
Looking ahead, revenue expectations remain high, boosted by the festive season in India.
Export performance declined, with only 43% of MSMEs reporting positive growth in export sales. However, exporters remain confident, with 56% expecting healthy growth in the next year.
Profit margins
Most MSMEs reported stable profit margins, with nearly one in five witnessing improvements. While a small portion (15-20%) of businesses experienced some pressure on profits, the sector’s overall sentiment about the future remains strong.
According to ANI, the SIDBI survey concluded that the manufacturing and services segments are set to continue their positive momentum in the near future, confirming the sector’s resilience despite global economic headwinds.
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