New Delhi, Jan 13 India’s MSME sector is showing early signs of revival with nearly eight in ten firms reporting improved performance in recent months and 86 per cent expecting business growth in 2026, a report said on Tuesday.
The report from an SME focused NBFC NeoGrowth found constructive optimism driven by strong festive sales, improved cash flow and GST 2.0 benefits.
The study of over 2,000 MSMEs across over 25 cities found that over 71 per cent of MSMEs plan to expand shops or open new outlets and 30 per cent intend to add products or brands, signalling a shift from short‑term recovery to medium‑term confidence, the report said.
City- and sector level trends show optimism is strongest in consumer facing segments, where demand visibility has improved. Top industries include beauty, wellness, automobile and food & beverage, the report said.
“The study points to early green shoots across the MSME sector. Festive demand, coupled with stronger digital payment adoption and GST 2.0 benefits has started to support business momentum. Measured confidence among MSMEs, with growth plans is notable,” said Arun Nayyar, Managing Director and CEO, NeoGrowth.
MSMEs expectations from Budget 2026 centre on measures that can reinforce operational ease and continuity. Businesses prioritised timely access to working capital, smoother and faster access to existing government schemes. Around a quarter of MSMEs highlighted the importance of faster and improved access to government schemes, alongside continued simplification of GST and compliance processes.
Merchant‑led digital transactions surged during the festive months, with UPI processing a record Rs 27.28 lakh crore across 20.7 billion transactions in October, improving cash‑flow visibility for MSMEs, the report said.
This festive-led uplift, supported by GST 2.0 rate rationalisation, helped ease pricing pressure across mass-consumption categories and contributed to better realised revenues.
Over half of surveyed MSMEs plan to seek business loans in 2026 for expansion, inventory build‑up and working capital, with credit intent more pronounced in electronics, mobile and personal services, the report noted.
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