PHDCCI SME Market Sentiment Index: Assessing the Resilience of SME Manufacturing Firms in India
The PHD Chamber of Commerce and Industry (PHDCCI) has released its comprehensive SME Market Sentiment Index (SMESI), offering a data-driven deep dive into the current health and future trajectory of the SME market. Based on an extensive survey of 3,000 SME manufacturing firms in India, the report provides a critical barometer for industrial growth, navigating through a landscape of evolving domestic demand and global headwinds.
Navigating Expansion in the SME Market
The report highlights a resilient expansionary phase for the sector. The SME Business Activity Index (SME-BAI) for the April–June 2025 period rose to 58.3, up from 57.7 in the previous round. This growth was primarily fueled by significant improvements in supply-side efficiencies, notably a reduction in logistics constraints and faster supplier delivery times. Despite this uptick, the report sounds a note of caution regarding demand; the new orders index saw a contraction to 61.7, reflecting a softening in market appetite.
Sentiment Analysis of SME Manufacturing Firms in India
While production volumes remain in expansion territory (63.3), the sentiment among SME manufacturing firms in India regarding workforce expansion has turned cautious. The employment sentiment index softened to 51.7, with nearly 57% of respondents indicating no immediate hiring plans. However, the outlook for long-term growth remains robust, as evidenced by a high inventory index (66.7) and strong capital expenditure intentions. Approximately 60% of SMEs plan to increase investments, bolstered by the positive impact of GST 2.0 reforms.
Strategic Industry Recommendations
To sustain this momentum, PHDCCI advocates for critical policy interventions. Key recommendations include the strict enforcement of the 45-day payment rule for MSMEs, the release of blocked government funds (EMDs and bank guarantees), and a review of Quality Control Orders (QCOs) on essential machinery. These steps are vital to ensuring that the SME market continues to serve as the backbone of India’s journey toward a production-led economy.