Business Confidence Rises Despite Economic Concerns

Indian businesses appear increasingly concerned about the overall economic environment, yet their confidence in their own business prospects continues to strengthen.

This was revealed in the latest quarterly Business Confidence and Performance Index (BCPI) survey conducted by IMA India, an economic and business research firm. The survey highlighted an unprecedented divergence between sentiment towards the broader economy and confidence in individual businesses. The Business Sentiment Index stood at 62.1, while the Capital Expenditure Index reached 57.4. Both indices recorded growth for the third consecutive quarter.

The survey found that although pessimistic assessments of the broader economy outweighed optimistic expectations, companies in the industrial sector reported better-than-expected improvements in business performance. Expectations regarding corporate profitability and capacity utilisation also strengthened. Nearly 60% of companies are planning capital investments.

The survey found that 57.6% of companies had either approved new investments or were planning to do so, bringing the figure close to the highest levels recorded in recent surveys.

According to IMA India, “Companies are more confident about their own business prospects than the broader economy. Expectations for sales and profits have improved, but geopolitical uncertainty continues to affect the outlook. Potential supply chain disruptions and fluctuations in crude oil prices are having a particularly significant impact.

Companies are investing in opportunities that are visible while remaining cautious about risks beyond their control.”

Despite the weaker economic outlook, expectations for sales and new orders remained positive. However, the pace of improvement varied across different sectors. The proportion of companies expecting an increase in capacity utilisation was also higher than the proportion anticipating a decline.

Larger companies appeared more optimistic about investment prospects than smaller ones. Companies with higher revenues recorded a net capital expenditure score of 66.7, following a sharp increase in the previous quarter. In contrast, companies with lower revenues registered a negative score of 8.8.

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