In an uncertain world, India's small businesses are sure about growth

MSMEs hopeful about first quarter performance and most don't think US tariffs will affect them

Small and medium businesses in the country are optimistic about the first quarter of FY26 (Q1 FY26) and those in the services sector do not see US tariff hikes on India affecting them, says a survey that was conducted before President Donald Trump cracked down on Indian goods.

 

A smaller share of manufacturing companies said the same about the tariffs, according to the third MSME Outlook Survey for April-June 2025 conducted by Small Industries Development Bank of India (SIDBI). The survey had 1,200 micro, small and medium enterprises (MSMEs) as respondents and is based on the MSME Business Confidence Index. The index tracks business conditions based on six parameters: sales, profit margins, employment, access to working capital, availability of overall finance, and overall outlook.

 

As many as 53 per cent of MSMEs in the services sector reported no impact of US tariff hikes. In manufacturing, 38 per cent of MSMEs noted an impact and 40 per cent did not. 

 

Business confidence among trading and manufacturing MSMEs increased in Q1 FY26 compared to the past two quarters. Such sentiment declined in the services sector. 

 

Optimism about sales increased among MSMEs in manufacturing (62 per cent) and trading (60 per cent) in Q1 FY26, outpacing services (55 per cent). The share of respondents expressing pessimism dropped significantly across MSMEs, especially in manufacturing, where it fell by six percentage points to seven per cent. 

 

The survey said MSMEs have achieved a strong foundation for growth amid improvements in operational efficiency, financial accessibility, and business environment. Although it was released before Trump imposed an additional 25 per cent tariff on India, it shows the country’s small businesses were resilient amid global trade uncertainties.