Business sentiments moderated in the second quarter of the 2025-26 after improving for three consecutive quarters due to global uncertainties, particularly the US policies including the imposition of additional tariffs, hike in H1-B visa fees, and tariffs on branded and patented pharmaceuticals, according the NCAER Business Expectations Survey for India, released on Monday.
The NCAER’s Business Confidence Index (BCI) for the second quarter of 2025-26 eased from 149.4 in the first quarter to 142.6 in the second quarter.
“After improving for three consecutive quarters, business sentiments moderated in the second quarter of the current fiscal compared to the first quarter. The BCI eased from 149.4 in 2025-26: Q1 to 142.6 in 2025−26:Q2,” the survey said. “However, compared to the corresponding period in the previous fiscal year, business sentiments still remain elevated (142.6 in 2025-26:Q2 compared to 134.3 in 2024-25:Q2).”
The NCAER said in a statement that the present round the survey was carried out in September, covering 484 respondents spread across six cities. The period was marked by international uncertainties and domestic GST reforms.
“The BCI was driven down by easing of sentiments in three of the four components, namely ‘overall economic conditions to improve in the next six months’; ‘financial position of the firms will improve in the next six months’; and ‘present investment climate is positive’. However, there was improvement in sentiments regarding ‘present capacity utilisation being close to or above the optimal level’,” the NCAER said.. It further stated that the share of positive responses remained above 50% for all four components, which indicates slower growth momentum going forward.
The NCAER stated that components dealing with macro sentiments were relatively more negatively affected, while the impact was mixed on the components dealing with micro sentiments.
Underlining that sentiments differed across firm size, sectors, and regions, NCAER stated that the BCI for MSMEs (annual turnover of less than Rs 100 crore) marginally went up from 137.1 in the first quarter to 138.2 in the second quarter, signalling virtually unchanged sentiments. For the large firms (annual turnover of more than Rs 100 crore), the BCI went down from 171.6 in Q1 to 149.9 in Q2.
The business prospects exhibited mixed trends in the NCAER survey due to divergence in different parameters. It stated that the share of firms expecting an increase in production in the next six months and an increase in domestic sales went up, while there was a contraction in the share of firms expecting new orders in the next six months.
