Business Sentiment Softens in Q4 Amid Global Uncertainty, while Domestic Orders Show Continued Resilience

The Dun & Bradstreet Business Optimism Index India declined by 1.9% (q-o-q) for Q4 2025

Mumbai, October 27, 2025:  Dun & Bradstreet, a global leader in business decisioning data and analytics, released the Business Optimism Index (BOI) for Q4 2025, which stood at 115—reflecting a 1.9% decline from the previous quarter. The dip was primarily driven by a fall in optimism among small and medium sized businesses, potentially impacted by tariff uncertainty and global supply chain disruptions, while large businesses remain optimistic.

Despite an overall decline in optimism around export orders, certain key export-oriented sectors, including textiles and automotives, bucked the trend, recording improvements in export order and profitability optimism (despite their exposure to US tariffs). This is being supported by India’s diversification efforts, as it is negotiating trade deals and agreements with the EU (expected by the end of December 2025), Netherlands, New Zealand, Oman, Peru, Chile and the Eurasian Economic Union (EAEU). While US tariffs are expected to impact key export-centric sectors, the overall effect on India’s GDP remains limited—given the strength of its domestic market and a supportive policy environment. 

Businesses in nine out of the 16 sectors assessed have noted an increase in confidence in the domestic economy in Q4, with electrical and textile industries showing notable quarter-on-quarter growth. Selling volume optimism too has increased by 7 percentage points q-o-q in Q4, led by higher confidence in domestic orders, which has increased by 4 percentage points q-o-q. Consistently increasing sales volume and domestic orders (since Q1 2025), indicate sustained confidence in the Indian economy. Improving domestic indicators such as falling NPAs (which fell to 2.58% in March 2025) and declining unemployment rates (which fell to 5.1% in August 2025) suggest resilience; with recent policy measures like Goods & Services Tax revisions and an accommodative monetary policy stance underpinning a broadly strong domestic outlook.  Overall, businesses are navigating the current landscape with measured confidence, balancing global risks with robust domestic opportunities.

The Dun & Bradstreet Business Optimism Index, which has been tracking the changing business sentiment of India Inc. since 2002, continues to serve as a reliable leading indicator of India’s economic growth, maintaining a strong correlation of approximately 80% with the Gross Domestic Product (GDP).

Dun & Bradstreet Business Optimism Index

Arun Singh, Global Chief Economist, Dun & Bradstreet said,

“The Q4 decline in the Dun & Bradstreet Business Optimism Index reflects increased caution among small and medium-sized firms amid tariff uncertainty and ongoing global supply chain realignments. While large firms may absorb external shocks through scale and diversification, SMEs could face tighter margins and weaker demand, leading to uneven sentiment across business sizes.  Although optimism on export orders across the majority of the sectors has declined, encouraging signs can be noted in export-centric sectors like textiles and automotives. Despite their high exposure to US tariffs, these sectors have recorded improvements in export order optimism, supported by ongoing trade diversification efforts and supportive policy reforms. Moreover, businesses expect domestic orders to increase in the next quarter, reflecting sustained confidence in the domestic market. This is being supported by resilient growth, and robust rural demand. Looking ahead, while challenges persist—particularly for smaller firms—the combination of sectoral resilience, domestic demand, and ongoing policy support may help stabilize business sentiment in the coming quarters.”

Key findings from the Q4 2025 survey

• The optimism for sales volume increased by 7 percentage points in Q4 2025 compared to the previous quarter Q3 2025. The food, beverages, metals, and transportation sectors are the most optimistic, while construction and information & communication sectors show lower optimism.
• The optimism for domestic orders rose by 4 percentage points in Q4 2025 compared to the previous quarter Q3 2025. Optimism is highest amongst administrative and professional services, mining and utility sectors, while metals, textiles and automotives sectors report the lowest optimism.
• The optimism for export orders fell by 3 percentage points in Q4 2025 compared to the previous quarter Q3 2025. Expectations remain subdued in professional and administrative services, and construction, while optimism is strong in chemicals, mining, and automotive sectors.
• The optimism for selling prices rose by 2 percentage points in Q4 2025 compared to the previous quarter Q3 2025. Chemicals, capital goods and automotive sectors are highly optimistic, while professional and administrative services, construction, financial and insurance sectors are least optimistic on this parameter.
• The optimism for net profit fell by 4 percentage points in Q3 2025 compared to the previous quarter Q2 2025. Utility, information and communication and food sectors show lowest optimism, while optimism is highest in mining, professional and administrative services and financial and insurance activities.
• The optimism for the global macroeconomic environment fell by 8 percentage points in Q4 2025 compared to the previous quarter Q3 2025. The automotive and hospitality sectors exhibit low confidence this parameter, while the chemicals sector, along with utilities and professional and administrative services, remain more optimistic.
• The optimism for employment fell by 3 percentage points in Q4 2025, compared to Q3 2025. The accommodation and food services, real estate activities and food sector exhibit high optimism; while construction, manufacturing of capital goods and metals sector show lower optimism.
• The optimism for the domestic macroeconomic environment fell by 4 percentage points in Q4 2025 as compared to Q3 2025. Optimism is high in accommodation and food services, manufacturing of capital goods and manufacturing of chemicals; whereas optimism is low in wholesale and retail, real estate and mining sectors.
• The optimism for input cost fell by 7 percentage points in Q4 2025, as compared to Q3 2025. Optimism is higher in metals, wholesale and retail and real estate activities; whereas professional and administrative services information and communication services and financial and insurance activities saw reduced optimism.
• Optimism for inventory levels increased by 4 percentage points in Q4 2025, as compared to Q3 2025. Optimism is high in manufacturing of electricals, manufacturing of chemicals and textiles, whereas lower optimism is seen in real estate, manufacturing of capital goods and manufacturing of automotives.