Over 50 pc of manufacturing MSMEs report sales growth in Q1FY26, but exporters affected by tariffs: SIDBI survey

NEW DELHI: More than half of the manufacturing and trading Micro, Small and Medium Enterprises (MSMEs) in India have reported an increase in sales during the first quarter of the current financial year. However, exporters felt the pinch of tariffs, noted the latest MSME Outlook Survey (MOS) conducted by the Small Industries Development Bank of India (SIDBI).

The third round of the MSME Outlook Survey, covering the period April to June 2025, found that 42 per cent of MSMEs in the services sector also witnessed sales growth, while 48 per cent reported stable sales. The SIDBI report stated, “Over half of manufacturing and trading MSMEs reported sales growth in Q1FY26”.

On a year-on-year basis, MSMEs across all sectors said they had seen sales growth. Around 60 per cent of the participants expect further growth in sales in the same quarter a year ahead. However, the report also highlighted some concerns. Nearly 40 per cent of MSME exporters said they were directly or indirectly affected by ongoing tariff-related issues, reflecting the impact of global trade uncertainties on Indian businesses.

Despite these challenges, the overall mood among MSMEs remains positive. The Composite MSME Business Expectation Index (M-BEI) for the next quarter stood at 62.19, and for the quarter a year ahead, it stood at 67.88. These figures indicate a fairly optimistic business outlook for the sector.

At the sectoral level, MSMEs in the trading and services sectors showed stronger optimism. The M-BEI for Q1FY27, as compared to Q1FY26, was recorded at 68.32 for trading and 68.24 for services. However, there is a moderate dip in the expectation indices across all sectors for the next quarter (Q2FY26), suggesting some near-term uncertainty due to the evolving global business environment.

The SIDBI survey tracks business sentiments and short-term expectations of MSMEs in India. It also helps in filling critical data gaps in the sector by computing the MSME Business Confidence Index (M-BCI), which measures sentiment for the current quarter (Q1FY26 vs Q4FY25), and the MSME Business Expectations Index (M-BEI), which measures expectations for future quarters.

The indices are based on six key parameters: sales, profit margins, availability of skilled labour, access to working capital finance, access to overall finance, and the overall business situation. (ANI)