New Delhi, Apr 21 (KNN) India’s manufacturing MSME sector saw moderation in growth momentum during the quarter ending March 2026 even as it continued to remain in expansion territory, according to PHD Chamber of Commerce and Industry’s (PHDCCI) latest SME Market Sentiment Index (SMESI) survey.
Growth Slows, Outlook Remains Positive
The SME Business Activity Index (SME-BAI) stood at 56.5 in the January–March 2026 quarter, down from 58.9 in the previous quarter, indicating continued but slower expansion.
The SME Business Outlook Index (SME-BOI) also eased to 58.7 for the April–June 2026 quarter from 60.7 earlier, reflecting a positive yet cautious outlook, reported The Economic Times.
Capex Plans Rise, Hiring Sentiment Mixed
The survey, based on responses from 3,000 manufacturing MSMEs, showed that growth in business activity was primarily driven by new orders and production, though at a moderating pace. Around 37 percent of firms reported an increase in new orders during the quarter.
Employment and supplier delivery timelines remained largely unchanged, with nearly 60 percent of firms reporting no variation, pointing to cautious hiring and stable domestic logistics conditions. Inventory levels showed moderate improvement, suggesting a gradual recovery in demand.
Looking ahead, 37 percent of respondents expect further expansion in business activity, while nearly half anticipate no significant change. About 47 percent of firms plan to increase capital expenditure, supported by demand expectations, although hiring sentiment remains mixed.
Global Disruptions Raise Costs, Policy Support Sought
The report flagged rising external risks, particularly due to the ongoing disruptions linked to the West Asia crisis. MSMEs reported extended transit times of 15–20 days due to rerouting via the Red Sea and the Strait of Hormuz, along with higher freight and marine insurance costs.
These disruptions have led to working capital pressures, as delayed shipments impact receivables while fixed costs persist, affecting margins and cash flows.
Industry stakeholders have called for policy support measures, including expanded credit guarantee schemes, working capital interest subvention, logistics cost support and accelerated efforts toward energy diversification.
The findings indicate that while the MSME manufacturing sector remains resilient, sustaining growth momentum will depend on policy support and stabilisation of global conditions.
(KNN Bureau)
2012-01-26
