New Delhi : A new report released by the PHD Research Bureau of PHDCCI reveals positive momentum in business activity for Indian SMEs in Q4 FY2025 compared to the previous quarter, with a robust growth outlook projected for Q1 FY2026.
The findings are based on a comprehensive survey of 3,000 SME manufacturing firms across India.
According to PHDCCI President Hemant Jain, government initiatives including credit support, technological assistance, infrastructure development, and skill training have transformed small and medium-sized enterprises into a vibrant and dynamic sector of the Indian economy.
These efforts have successfully fostered entrepreneurship and created numerous employment opportunities.
To effectively capture SME market sentiment, the report introduces two indices: the SME Business Activity Index (SME-BAI) and SME Business Outlook Index (SME-BOI).
The SME-BAI measures current business activity compared to the previous quarter, while the SME-BOI captures business expectations for the coming quarter.
Both indices operate on a scale of 0 to 100, with values above 50 indicating expansion and below 50 signaling contraction.
The SME-BAI recorded a robust 57.7 points, demonstrating significant expansion in manufacturing activities compared to the previous quarter.
This growth is primarily driven by a strong New Orders Index of 71.7, reflecting high demand and a healthy work pipeline, along with an Output/Production Index of 66.7, indicating business activities are gaining substantial momentum.
Employment indicators remain positive with an index reading of 55.0, aligning with rising economic activity. The Inventories Index stands at 60.0, suggesting firms are actively restocking to meet anticipated future demand.
Looking ahead, the SME-BOI stands at 60.3, signaling strong confidence in the economy for the upcoming quarter.
Notably, 67 per cent of respondents expect improvement in business activity, 47 per cent anticipate increased hiring, and 53 per cent plan to boost capital expenditure.
Ranjeet Mehta, Secretary General and CEO, PHDCCI, emphasised that these indices have been created to fulfill the need for a reliable, data-driven tool to assess the health and outlook of India’s SME manufacturing sector, which serves as a backbone to the Indian economy.
The continuous support from the government has resulted in the formalisation of more than 5 crore MSMEs, contributing significantly to exports, creating millions of jobs, and fostering inclusive development.
PHDCCI’s Chief Economist Sanat Kumar noted that the organisation plans to expand its analytical framework by adding indices related to exports and services markets. He concluded that their findings highlight a positive outlook for growth, job creation, and investment in the SME manufacturing sector.
