MSME sector stays resilient in Q2 FY26, eyes festive season boost: SIDBI report
- IBEF
- October 28, 2025
India’s micro, small and medium enterprises (MSMEs) sector remained resilient in Q2 FY26, supported by strong domestic demand, easing input costs, and government policy measures such as Goods and Services Tax (GST) rate cuts, according to a survey by the Small Industries Development Bank of India (SIDBI). Of the 1,200 MSMEs surveyed across regions, 50% of trading and 47% of manufacturing units reported positive growth. At the same time, the services sector continued to perform strongly. Although export optimism dipped, with only 43% of MSMEs recording export growth, over half expect improvement in 2026. Profitability largely held steady, with nearly one in five firms reporting higher margins, driven by easing cost pressures and improving capacity utilisation.
The SIDBI report highlighted progress in credit access, labour availability, and business sentiment. Credit availability improved across manufacturing, where 92% of firms said finance was accessible, though gaps remain in services. The share of MSMEs reporting higher borrowing costs dropped from 41% to 33%, reflecting reduced interest burdens. Labour conditions improved, with 25% of manufacturers and 20% of service providers reporting above-normal utilisation, while 42% of manufacturing and 35% of service firms expanded capacity. MSMEs also cited smoother regulatory compliance and better access to utilities, with over 60% of respondents expecting further improvement in the business environment next year, especially with the upcoming festive season expected to boost sales.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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