India’s business confidence hits two-year low amid sectoral divergence: IMA India’s Q3FY25 BCPI Report

Business confidence has taken a sharp dive in India, as reflected in IMA India’s latest Business Confidence and Performance Index (BCPI). Falling to 59.7 in October 2024—the lowest in over two years—the index underscores growing pessimism about the macroeconomic landscape. Once optimistic about economic improvement, just 17% of respondents reported better-than-expected conditions, a stark contrast to the 45% who forecasted positive changes earlier in the year.

The data paints a mixed picture across sectors. IT and ITeS witnessed a resurgence, with their index soaring by 15.7 points, while chemicals suffered a dramatic 22.1-point slump. Manufacturing has taken a hit, with its performance index falling 7.9 points, leaving the services sector to lead modest gains. Sales and new orders offer glimmers of hope, with over half of surveyed companies predicting growth, particularly from rural and semi-urban markets, despite weakness in tier-one cities.

Hiring intentions have faltered, with only 31% of firms planning to expand their workforce. In contrast, capital expenditure appears resilient, with 63% of companies committing to fresh investments, up from 54% in Q2. The appetite for advertising spend is waning, though travel budgets show both expansion and contraction—a mixed bag indicative of strategic caution.

B2B firms report robust demand from healthcare, BFSI, and general services sectors, while automotives and consumer goods falter. Smaller companies remain more optimistic than their larger counterparts, potentially reflecting agility in a volatile landscape.

With the macroeconomic outlook clouded and sectoral shifts pronounced, India’s corporate sector navigates a complex blend of opportunity and uncertainty, emphasising the need for agility in strategy and investment.