Mumbai, September 20, 2023: India's small and medium enterprises have shown a significant uptick in their optimism in most of the key parameters including sales, employment, prices, inventory, and investment, during the third quarter (July-September) of the calendar year 2023, according to the latest ASSOCHAM - Dun & Bradstreet Small Business Confidence Index (SBCI). The SBCI stood at 105.0 in Q3 2023, significantly up by 23% compared to Q2 2023.
All the indicators have recorded significant uptick on q-o-q basis except for raw material prices. Overall demand sentiment for Indian SMEs remains upbeat for the quarter. “Now that the SMEs find themselves on a fast lane, Indian economy would get further momentum to stay as the fastest growing economy amongst the leading economies of the world," said ASSOCHAM Secretary General Mr Deepak Sood.
The Indian economy’s demand environment has been buoyant, with 6 out of 7 SMEs expecting higher domestic order inflows. Despite the persistent weaknesses in the external economy, Indian SMEs are sanguine, expecting an improvement in their business prospects. The resilient mood of SMEs is also visible in sales prices and profitability. Expectation of high raw materials prices does not seem to be a major concern.
Similarly, despite high interest rates maintained by RBI, around 69% of respondents expect credit availability to be normal in Q3 2023. Consequently, businesses are poised to embark on expansionary strategies, including new hiring and investments in fixed capital.
“Notwithstanding subdued growth of the global economy, the Indian economy is thriving on robust credit expansion and an optimistic domestic demand outlook that is reflected across parameters. Despite a challenging global environment, Indian SMEs appear to be extending their competitive advantage for improving their export outlook. Three in four respondents have indicated planned capital expenditure and hiring expansion.” said Dr Arun Singh, Global Chief Economist, Dun & Bradstreet, a leading global provider of business decisioning data and analytics.
The persistent high input costs are expected to endure among businesses, primarily due to the limited bargaining power of small and medium-sized enterprises (SMEs), potential supply chain bottlenecks and uncertainty in the movement of commodity prices globally. Consequently, 80% SMEs anticipate rising costs to translate into increased selling prices in Q3 2023. Higher sales prices and robust demand outlook are likely to favour higher profitability in Q3 2023, as reflected by the hike of 31 percentage points in optimism for net profits on quarterly basis.