India's SME Sector Shows Steady Growth Amid Challenges

The PHDCCI's latest findings reveal India's SME manufacturing sector's growth, despite demand and employment challenges. Key indices show improved activity with stronger supplier deliveries, though new orders and hiring plans are subdued. Industry leaders call for supportive policies to enhance sector resilience.

The latest report from the PHD Chamber of Commerce and Industry (PHDCCI) reveals continued growth in India's SME manufacturing sector but highlights ongoing challenges in demand and job creation. The SME Market Sentiment Index (SMESI) indicates expansion, although employment figures remain under pressure.

In the April-June 2025 period, the SME Business Activity Index (SME-BAI) increased to 58.3 from 57.7, suggesting rising business activity mainly due to improved supplier delivery times. However, new order levels sharply decreased to 61.7, and output declined, reflecting weaker demand. Employment sentiment also dropped to 51.7 amid geopolitical uncertainties.

Forecasts for October-December 2025 show a slightly lower SME Business Outlook Index (SME-BOI) at 60, indicating cautious optimism. While most SMEs foresee stable business activity, a significant share plans capital expenditures inspired by GST 2.0 reforms. Industry figures emphasize timely payment disbursals and regulatory reviews to support SMEs further.