New Delhi, May 20 (IANS) There has been a positive momentum in business activity in India’s small and medium enterprises sector for January-March quarter (Q4) of FY2025, compared to previous quarter Q3, and a robust growth outlook is expected for the next quarter (Q1 FY2026), according to the SME Market Sentiment Index released by business chamber PHDCCI on Tuesday.

The survey is based on 3,000 pan-India SME firms across various manufacturing units.

“The government’s proactive and effective initiatives – including credit support, technological assistance, infrastructure development, and skill training – have significantly transformed small and medium-sized enterprises (SMEs) into a vibrant and dynamic sector of the Indian economy. These efforts have fostered entrepreneurship and created numerous employment opportunities,” said PHDCCI President Hemant Jain.

To capture the SME market sentiment, two indices, the SME Business Activity Index (SME-BAI) and SME Business Outlook Index (SME-BOI) were computed, he said.

Both these indices will serve as a valuable tool for policymakers, industry stakeholders, and investors to make informed decisions, Jain added.

The value of both indices ranges from 0 to 100, where 50 is the base value that separates expansion from contraction. The SME Business Activity Index (SME-BAI) recorded a robust 57.7 points, indicating significant expansion in manufacturing activities compared to the previous quarter. This growth is driven by a strong New Orders Index of 71.7, reflecting high demand and a strong work pipeline, along with an Output/Production Index of 66.7, pointing to business activities gaining momentum, he said.

The Employment Index stood steady at 55.0, aligning with the rising economic activity, while the Inventories Index of 60.0 suggests that firms are actively restocking to meet anticipated demand, the PHDCCI chief said.

“We appreciate the policy reforms and initiatives undertaken by the government to support the SME sector. These will go a long way to transform the MSME landscape,” he said.

SME Business Outlook Index (SME-BOI) which provides the outlook for the next quarter stood at 60.3, signaling strong confidence in the economy. Notably, 67 per cent of respondents expect an improvement in business activity, 47 per cent anticipate increased hiring, and 53 per cent plan to boost capital expenditure, Jain added.

PHDCCI Secretary General and CEO Ranjeet Mehta emphasised that these indices have been created to fulfil the need for a reliable, data-driven tool to assess the health and outlook of India’s SME manufacturing sector, which is a backbone to the Indian economy. “The continuous handholding by 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. Going forward, to fulfil our endeavour to promote the growth of the SME sector, we will add indices related to exports and the services market,” he said.

“Our findings highlight a positive outlook for growth, job creation, and investment in the SME manufacturing sector,” PHDCCI Chief Economist Sanat Kumar said.

–IANS

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