Bengaluru, January 12th, 2024: 90% MSMEs are confident that India’s economy will be resilient or will further improve in 2024, creating an enabling environment to conduct business. Further, supported by government initiatives to enhance ease of doing business and a strong consumer demand, 91% expect their profits to increase in 2024. These insights were revealed in the second edition of the NeoInsights study – ‘MSME Business Confidence Study’ for the year 2024 – released today by NeoGrowth, the MSME-focused NBFC in India, leveraging the digital ecosystem.
The study, which has analyzed responses from nearly 3,000 MSMEs from 25+ top cities in India, highlighted the continued confidence of small businesses in India’s economy, their preparedness to meet consumer demand, and the strategies they planned to implement in 2024 to drive business growth.
Arun Nayyar, Managing Director and CEO of NeoGrowth said: “Similar to 2023, MSMEs have continued to radiate optimism in India’s business environment. From steady growth in profits to expansion plans, their confidence portrays a vibrant picture of prospects for the country’s economic growth in 2024. India’s small businesses will continue to take center-stage in India’s growth story, and we are thrilled to be part of their journey by providing them timely credit to meet their evolving business needs.”
The Year That Was: A 2023 Lookback
In the first edition of the MSME Business Confidence Study conducted with ~3,000 MSMEs to understand their 2023 business expectations, 96% MSME owners expected their profits to increase in 2023 and 75% were optimistic of India’s economy to conduct business. In this survey conducted for the MSME Business Confidence Study 2024, despite the volatile global environment, 3 in 5 MSMEs mentioned that they have met their 2023 business targets. ~80% of women-led MSMEs achieved their business targets set for 2023.
MSMEs Thrive with Government Support in 2023
Over 40% of Micro, Small, and Medium Enterprises (MSMEs) across India experienced a major boost in 2023 with the support of diverse government schemes tailored to their needs. Notably, the manufacturing and wholesale/trade sectors emerged as the biggest beneficiaries, reaping significant benefits from these initiatives. Delhi-based MSMEs availed the benefits from government schemes the most, followed by MSMEs from Pune and Hyderabad.
Optimism Shines for India’s Economy in 2024
Overall, 90% MSMEs are confident of India’s economy in 2024. MSMEs in the wholesale/trading sector are leading the charge on economic optimism, with a resounding 95% expressing confidence in India’s robust growth trajectory for 2024. Supportive government policies and regulations coupled with robust domestic and global demand further fuel this sector’s unwavering optimism.
Retail MSMEs are very optimistic as 94% of MSME retailers expect an increase in profits in 2024. Also, 58% of MSMEs in the Trading/Wholesale segment expect their profits to increase by over 30%.
Consumer Demand Set to Surge in 2024
75% of Wholesale and Trader segment MSMEs remain bullish on consumer demand in 2024, echoing the optimism expressed in 2023. With respect to locations, Delhi is most optimistic where a whopping 87% of surveyed MSMEs anticipate a surge in consumer spending. Bangalore and Pune follow suit with impressive levels of confidence.
Strong credit requirement to continue in 2024
Nearly 60% of businesses across all sectors anticipate the need for credit in 2024. The Wholesale/Trading and Services sectors anticipate the highest demand, with a whopping 64% of businesses seeking credit to boost their operations. Notably, the appetite for loans seems strongest in metropolitan hubs such as Bangalore (88%), Pune (87%), and Delhi (84%).
MSMEs demand convenience from their lender
The top three factors for consideration while choosing a loan provider in 2024 would be quick disbursals, digitally enabled loan journey, and deal terms.
The highest number of MSMEs in Delhi would choose a lender with a digital loan process, whereas MSMEs in Pune prefer loan providers with fast approvals and disbursals.
Expansion spree expected in 2024
~60% of MSMEs plan to open new stores and offer new products or services to their customers in 2024. MSMEs in Bangalore, Delhi, and Pune have shown willingness to expand their presence in 2024. The highest number of MSMEs in the Wholesale/ Trading sector expects business and store expansion in 2024.
Positive sentiment for hiring
44% of MSMEs plan to hire more employees in 2024. Maximum hiring in 2024 is expected by MSMEs in Bangalore and Pune. Some of the focus areas for MSMEs while hiring in 2024 would be creating job opportunities for people with disabilities/ special needs, hiring from smaller towns, and increased share of women in their workforce.
MSMEs going eco-friendly
81% of MSMEs plan to adopt sustainable and eco-friendly practices in 2024. Similar to 2023, MSMEs have rated ‘going plastic-free’ as a key environment-friendly initiative of their business for 2024. In recent times, there has been a notable shift towards sustainability awareness and proactive measures to safeguard the planet.
Digital, the path ahead for MSMEs
In 2024, Indian MSMEs are gearing up for a digital revolution, with 82% planning to harness the power of online tools. This focus goes beyond just “going digital” and delves into five key areas: digital discovery (online selling), digital fulfilment (delivery partnerships and online marketplaces), digital transactions (cashless payments), digital operations (streamlining tasks like bookkeeping and ordering), and digital engagement (through google, social media and customer feedback).
“In all, this optimism across various areas of MSMEs’ businesses starting from digitization to support from government schemes is not only a mere trend but also a powerful engine for the nation’s economic ascent. The fast-evolving digital ecosystem is providing fuel for this engine, with accessible and streamlined credit options unshackling MSMEs from traditional hurdles. 2024 is poised to be a landmark year for these entrepreneurial heroes, propelling India towards its $5 trillion dream,” added Arun Nayyar, Managing Director and CEO of NeoGrowth.
