India’s MSMEs showing early signs of revival: NeoInsights report

Mumbai: India’s micro, small and medium enterprises (MSMEs) are showing early signs of revival, with business sentiment improving sharply in recent months, according to NeoGrowth’s latest NeoInsights report. Nearly eight in ten MSMEs reported better business performance recently, while confidence about 2026 has strengthened meaningfully.

NeoGrowth, an MSME-focused non-banking finance company, released the tenth edition of its flagship NeoInsights report—the fourth MSME Business Confidence Study for 2026—based on a survey of more than 2,000 enterprises across over 25 cities. The findings point to optimism firming up after a prolonged period of caution, supported by strong festive demand, improved cash flows and benefits from GST 2.0.

Looking ahead, 86 per cent of MSMEs expect their businesses to grow in 2026, indicating a shift from short-term recovery to medium-term confidence. The outlook aligns with the Confederation of Indian Industry’s latest Business Confidence Survey, which also highlights improving sentiment across industry on the back of resilient domestic demand and festive-led consumption. The convergence of MSME-level and broader industry trends suggests the recovery is becoming more broad-based ahead of Budget 2026.

The study shows expansion plans gaining traction, with over 71 per cent of MSMEs planning to expand their shops or open new outlets, while 30 per cent intend to add new products or brands. Optimism is strongest in consumer-facing sectors such as beauty and wellness, automobiles, and food and beverages.

As expectations from Budget 2026 build, MSMEs are seeking measures that support operational continuity, including timely access to working capital, faster access to government schemes, and further simplification of GST and compliance processes. Around a quarter of respondents highlighted the need for improved access to government schemes, while many also underscored the growing importance of digital tools and online payments in enhancing efficiency and reach.

Festive demand played a key role in strengthening momentum, with MSMEs reporting higher footfall and revenues during recent months. Increased adoption of digital payments further supported cash flow visibility, translating higher demand into realised receipts.

This improving confidence is also driving credit intent. Over half of MSMEs surveyed plan to take a business loan in 2026, primarily to fund expansion, inventory build-up and working capital needs. Overall, the findings suggest MSMEs are entering 2026 with greater clarity, preparedness and a cautious but positive outlook for sustained growth.