CRISIL SME TRACKER

Rising US and EU demand is set to drive SME-led growth, though tougher compliance rules may test smaller firms

Exports to key destinations such as North America, however, are expected to be hit by US tariffs.

This highly fragmented and labour-intensive industry is characterised by low capital intensity and high reliance on imported inputs, such as gold and rough diamonds

Small and medium enterprises (SMEs) are expected to play a crucial role in this growth given they account for 50-55 per cent of the industry by revenue

MSMEs, which account for 25-30 per cent of the industry revenue, are expected to see growth moderate to 4-6 per cent in FY26 compared with 5-7 per cent last financial year

Last financial year, the industry witnessed a sharp 10 per cent growth in revenue, driven by an 8 per cent year-on-year (Y-o-Y) increase in sugar prices and a steady 2 per cent rise in consumption

Among the segment drivers, the replacement market is expected to clock 6-8 per cent on-year growth, following 7 per cent rise last financial year

Despite this, growth is still projected to exceed decadal averages and will continue to be aided by demand from infrastructure and construction segments

In the FY24, exports of cut and polished diamonds, which account for about 60 per cent of India's gems and jewellery exports, fell nearly a third year-on-year

In FY24, state spends are expected to go up further by 8-12 per cent as their percentage achievement of budgetary allocations are expected to be largely in line with historical average

The cotton prices are likely to remain stable as cotton consumption continues to be lower than production, supporting the cost competitiveness of the cotton textile value chain

In the next financial year, the revenue is expected to grow 9-11 per cent as Lok Sabha elections in April-May are expected to boost demand

This augurs well for small and medium enterprises (SMEs), which have a 35-40 per cent share in industry revenue

Lower cane availability is expected to result in reduction in cane being diverted for ethanol production from 4.5 million tonne to 4 million tonne

But growth will still be healthy as discounts and lower retail prices will cushion the fall

Revenue growth for some specialty chemicals sub-segments is expected to moderate, in line with the correction in feedstock prices

In FY24, cotton yarn prices are projected to fall almost 15 per cent due to a high base and subdued export demand. This is expected to hurt price realisation

Private security players' key service offerings include manned guarding, cash management services, and allied services such as electronic security services

In December, the domestic pharmaceuticals market grew 10.4 per cent on exceptional growth in both volume sales and prices

Globally, supply is expected to ease as output in Brazil and Thailand, both major producers, is likely to revive