37% of MSMEs plan capacity expansion, similar proportion eyeing further investments: SIDBI report

Mumbai (Maharashtra) [India], April 8 : In a showcase to the improving conditions for Micro, Small, and Medium Enterprises (MSMEs), about 37 per cent of businesses are planning to expand their capacity during the current period, according to a SIDBI MSME Outlook Survey Edition-II.
The report adds that a similar proportion of MSMEs are planning additional investments over the next year.
"Capital expenditure intentions present another encouraging trend, with 37 per cent of MSMEs reporting capacity expansion during the current period and a similar proportion planning additional investments in the coming year," the report added.
Alongside this, a rising focus on sustainability is taking shape, with around 40 per cent of MSMEs in the manufacturing and services sectors implementing environmentally friendly technologies such as solar panels and e-vehicles, the report added.
Manoj Mittal, Chairman and Managing Director, SIDBI, while releasing the report, stated, "During a time of increased global uncertainties fuelled by unprecedented tariff barriers, MSMEs have shown remarkable resilience and pro-growth sentiments. Their plans for CAPEX, employment and adoption of sustainable and green technologies augur well for our economy."
The Composite M-BCI for Q4 FY25 stands at 60.82, marking an improvement from the previous quarter's 58.30. This increase indicates a sustained healthy business environment across the manufacturing, services, and trading sectors, with sector-specific M-BCIs also showing upward movement.
Looking ahead, expectations remain positive with M-BEIs for the next four quarters holding firm above 54. While the overall optimism has slightly moderated compared to the previous round--attributed to ongoing global economic uncertainties and rising tariff barriers--the sector continues to exhibit confidence in future performance, the report adds.
According to the SIDBI, MSMEs are buoyant on sales growth, driven by stronger order books, increased production, and higher selling prices.
A significant majority anticipates maintaining or improving profitability in Q4 FY25, despite moderate increases in input and salary costs. The outlook for profitability over the next year also remains upbeat, with MSMEs banking on higher production volumes and improved price realizations to support stable or better margins, the report added.
Employment generation continues to be a priority, with nearly one-third of the surveyed enterprises in the manufacturing and services sectors reporting increased workforce during the current quarter, the report added.
On the financing front, as per the report, access to credit remains widespread, with 80 per cent of respondents reporting availability.
However, the adequacy of this credit continues to be a concern, with 40 per cent of manufacturing and 41 per cent of services enterprises stating that the finance available does not fully meet their needs.
Optimism around improved credit access in the year ahead is evident, but nearly 20 per cent of MSMEs continue to express concerns, the report added.
Additionally, the cost of finance remains a pressing issue, with 40 per cent of MSMEs across sectors reporting higher borrowing costs during the survey period and an even higher percentage expecting these elevated costs to persist.