ASSOCHAM, Dun & Bradstreet Report Decline in SME Sentiment in Q2 2025

ASSOCHAM along with Dun & Bradstreet, a leading global provider of business decisioning data and analytics, has released its Small Business Confidence Index for Apr-Jun 2025 quarter. The findings from the Index, which tracks the optimism of small and medium enterprises in India, indicate a slight decline in small business sentiment, with the confidence index edging down by 1.8% in Apr-Jun 2025 quarter compared to the previous quarter, settling at 105.4. This suggests a more cautious outlook among small business executives. However, the index remains notably strong—up 6% year-over-year and well above the long-term average—signaling that overall optimism continues to hold steady.

“The findings of the ASSOCHAM–Dun & Bradstreet Small Business Confidence Index reflect a phase of cautious optimism among India’s small businesses, especially due to global uncertainties and supply chain disruptions. However, it is encouraging to note the underlying strength of domestic demand, improved hiring intentions and expectations of better financing access as monetary conditions ease. ASSOCHAM remains committed to working closely with all stakeholders to create a conducive environment for economic prosperity,'' said ASSOCHAM President Mr. Sanjay Nayar.    

“This edition of the Small Business Confidence Index highlights the nuanced sentiments among small businesses. A modest decline in the Confidence Index reflects a measured approach adopted by small businesses amid global trade challenges. The broader picture, however, remains positive, with strong domestic fundamentals. The small business segment continues to be a vital driver of the Indian economy. In order for them to thrive, better financing prospects, policy continuity and predictability, and convergent efforts of stakeholders will help them navigate short-term headwinds and achieve sustained growth.” said ASSOCHAM Secretary General Mr. Manish Singhal.

The ASSOCHAM D&B Small Business Confidence Index for Apr-Jun 2025 reveals cautious recalibration amid rising global uncertainties. While domestic demand remains strong, export order expectations plunged 17 points from Jan-Mar 2025, driven by frontloaded shipments before the April 2 U.S. tariff hike and weakening global trade. Net profit expectations dropped 6 points, and selling price optimism fell 13 points, highlighting growing margin pressures from cost volatility and subdued pricing power.

“The ASSOCHAM D&B Small Business Confidence Index for Apr-Jun 2025 quarter reflects a resilient but cautious sentiment among small businesses. Steady domestic orders, and an improved hiring outlook point to underlying strength supported by robust domestic demand. However, the sharp decline in export order expectations amid global trade tensions, particularly following U.S. tariff announcements, highlights external vulnerabilities. While small businesses are leveraging domestic tailwinds, margin pressures from rising costs and softer global demand are prompting a more conservative approach to pricing and inventory management. Sustained recovery will hinge on businesses maintaining operational agility and adapting to evolving global trade dynamics.” said Mr. Avinash Gupta, Managing Director, Dun & Bradstreet India

Firms report mounting margin pressures as weakened pricing power, volatile input costs, and ongoing supply-chain bottlenecks force them into lean inventory practices rather than bulk restocking. Investment plans have been scaled back, with fixed capital outlays moderating amid global headwinds, even as stronger hiring intentions reflect cautious optimism about domestic demand. At the same time, credit access is now seen as “normal” rather than “easy,” suggesting tighter lending standards despite recent RBI rate cuts. Nevertheless, businesses remain hopeful that continued monetary easing will gradually restore more accommodating financing conditions.

"Small businesses are standing at a critical crossroads, balancing robust domestic momentum against intensifying global headwinds, as reflected in the ASSOCHAM D&B SBCI Index. The uptick in domestic orders, hiring sentiment, and capacity utilization reflects confidence supported by resilient consumption trends and a stable policy environment. However, the sharp fall in export order expectations, combined with weakening pricing power and more cautious investment and credit outlooks, shows firms are recalibrating strategies amid trade risks and global demand uncertainty. Despite these headwinds, Dun & Bradstreet data highlights India’s advantage in sectors such as specialty chemicals, electrical machinery, and home textiles. Looking ahead, India–U.S. trade agreements will be pivotal; varying tariffs could reshape export dynamics. To remain resilient, small businesses must sharpen domestic focus, optimize capital allocation, and adapt swiftly to shifting global trade policies.” said Dr Arun Singh, Global Chief Economist, Dun & Bradstreet

As the external environment becomes more uncertain, sustaining confidence will hinge on how effectively businesses can adapt, by managing input costs, preserving margins, and aligning investment strategies with evolving market conditions. Strengthening domestic enablers while mitigating external vulnerabilities will be crucial for maintaining the growth momentum of India’s small business sector in the quarters ahead.