Indian MSMEs expect higher profitability in 2024: Report

The Indian micro, small, and medium enterprises (MSME) are "sensing high profitability" in 2024 compared to 2023, a survey conducted by NeoGrowth revealed.

The report highlighted that 90% of MSMEs are confident about India’s economy this calendar year, while 91% of these enterprises expect their profits to increase in 2024. Titled, NeoInsights MSME Business Confidence Study 2024, the report is based on a nationwide survey of about 3,000 business owners across 25 cities and over 75 industry segments.

It also indicated a high level of optimism among MSMEs in various sectors. In the wholesale and trading sector, 95% of MSMEs express confidence in the country's economic growth, closely followed by the manufacturing sector at 92%.

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Maintaining a positive outlook, about 67% of MSMEs anticipate a surge in consumer demand this year, especially those in the retail and trade/wholesale segment. Regionally, nearly 87% of MSMEs in Delhi exhibit a high level of optimism about increased consumer demand, followed by those in Bengaluru and Pune.

Meanwhile, consumer demand expectations have slightly dipped in other cities, with 67% of MSMEs believing consumer demand will go up in 2024 compared to 69% for 2023.

When it comes to business confidence in the new year, 95% of MSMEs in Bengaluru believe they will see profits in 2024, with a majority expecting profits to increase by over 30%. Hyderabad comes in second with 93% anticipating profits, followed by Delhi with 92% of businesses foreseeing profits.

Conversely, MSMEs in Mumbai have adopted a more conservative stance, with 56% saying that their profits will increase by less than 30% in 2024—mirroring the city's expectations from 2023, where 58% of businesses anticipated no more than a 30% increase in profits.

As goes the trend, in 2024, more MSMEs will be open to adopting sustainable practices, and 81% are already keen on going eco-friendly.  

Even hiring is expected to grow this year, the report added.

Following the 2023 trajectory, credit demand will also be growing this year with about 60% of MSMEs expected to avail of business loans in 2024. A similar trend is expected by women-led MSMEs. Bengaluru, Pune, and Delhi are expected to have the highest credit demand.