Even as geopolitical tensions and economic headwinds batter the world, India’s micro, small, and medium enterprises (MSMEs) in manufacturing are holding strong. The PHD Chamber of Commerce and Industry’s (PHDCCI) fresh SME Market Sentiment Index (SMESI) paints a picture of sustained growth, tempered by calls for robust policy backing to keep the engine running.
This fourth quarterly report analyzes data from January-March 2026 and forecasts for April-June, revealing a sector adapting adeptly to external pressures. Growth has softened slightly, but indicators point to continued expansion.
The SME Business Activity Index (SME-BAI) eased to 56.5 in Q1 2026 from 58.9 previously, maintaining expansionary levels. The forward-looking SME Business Outlook Index (SME-BOI) for the next quarter came in at 58.7, off from 60.7, yet optimistic.
New orders surged for 37% of respondents, propelling production higher. Supply chains and staffing levels held steady, signaling strategic caution. For the coming months, 37% foresee upticks in business, with 50% banking on status quo.
Notably, 47% of MSMEs are set to increase capital investments, betting on rising demand. Employment growth, however, proceeds gradually, highlighting a focus on balancing costs in turbulent times.
As global challenges persist, this report serves as a clarion call for governments to deliver consistent policy support—credit access, regulatory ease, and market stability—to empower MSMEs as pillars of India’s economic resurgence.
