SMEs confident about business outlook in Oct-Dec quarter: CII

NEW DELHI: Small and Medium Enterprises (SMEs) are optimistic about their business outlook in the October-December quarter on increased domestic demand coupled with improved prospects of credit availability, a CII survey has said.

The Business Confidence Index (BCI) of SMEs for the current quarter is estimated at 67 points on the scale of 0-100, an improvement of 1.4 points over the same period last year, CII said.

Buoyancy in gross sales is backed by strong prospects of domestic demand than exports demand, the survey said.

Slow recovery in the western economies along with appreciating rupee against US dollar could be among the major reasons behind it, it added.

India's SME sector was impacted due to the global economic downturn, leading to huge job losses.

The government has projected GDP growth of 8.5-8.75 per cent this fiscal. The GDP recorded 8.8 per cent growth in the first quarter of this fiscal.

The survey also reported improved outlook on prospects of credit availability for SMEs, even though it continues to be far below to be stated as 'most favourable'.

"With given upward pressure on interest rates, it may not be too long before credit cost starts adversely impacting the capacity expansion of this critical sector of the economy," it said.

While there is no separate data on SMEs, India's micro, small and medium enterprises (MSMEs) sector contributes 8 per cent of the country's GDP, 45 per cent of the manufactured output and 40 per cent of its exports.

The MSMEs provide employment to about 6 crore persons through 2.6 crore enterprises.

The survey also said the services sector on average are expecting to perform better than their industrial counterpart.