India’s small business sentiment has seen a slight moderation in the April–June 2025 quarter, as the ASSOCHAM–Dun & Bradstreet Small Business Confidence Index (SBCI) edged down by 1.8% from the previous quarter, settling at 105.4.
Despite the dip, the index remains 6% higher on a year-on-year basis and well above its long-term average, reflecting a phase of cautious optimism among India’s small and medium enterprises (SMEs).
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The quarterly index, which gauges the business outlook of SMEs across key parameters such as demand, profitability, investment, and hiring, indicates that small businesses are recalibrating strategies in response to global trade uncertainties, cost pressures, and tightening credit conditions.
Export order expectations witnessed a sharp drop of 17 points compared to the previous quarter, primarily due to frontloading of shipments ahead of the April 2 U.S. tariff hike and a broader decline in global trade momentum.
Profitability sentiment also softened, with net profit expectations falling by 6 points and selling price optimism dropping by 13 points, underlining margin pressures from volatile input costs and subdued pricing power.
The report notes that while fixed capital investment plans have been moderated amid global uncertainties, hiring sentiment remains strong—an indicator of confidence in domestic consumption trends. However, access to credit has transitioned from being perceived as “easy” to “normal,” suggesting stricter lending standards even after recent RBI rate cuts.
Despite the global turbulence, the overall confidence index points to continued underlying strength in India’s SME ecosystem. Experts stressed the importance of policy stability, better financing frameworks, and stakeholder collaboration to help small businesses navigate the evolving landscape.
As the external environment remains volatile, the path forward for small businesses will depend on operational agility, cost efficiency, and targeted investments aligned with changing market conditions.
The leading challenges with the small business remain the limited credit availability. Banks are often hesitant to lend due to lack of collateral or credit history.
Further, they are also struggling with high interest rates, as NBFCs or informal lenders may offer loans, but at significantly higher rates.
