CII Report on Growth of Service Sector of Indian SMEs

CII Business Confidence Index was released for second quarter of 2010. The responses were collected from 14 business outlook indicators from small business owners. Some of the indicators were capacity utilization, gross sales, new orders, expansion, employment, credit availability, and exports.

The business confidence index of overall SMEs including industry and service sectors was found to be 65.6. The index was found to be 66.1 for service sector and 65.2 for industrial sector of SMEs. This indicated a greater optimism for service sector of SMEs.

A varied degree of confidence was exhibited by SMEs for various indicators. With BCI of 86.1, the largest increase was found by gross sales. It was followed by new orders / contracts and capacity utilization with BCI of 78.8 and 78.3 respectively. BCI was found to be 70.1 for export demands and 53.5 for inventory level.

With increase in demand, there had been an increase in capital expansion and employment. The BCI value for capacity expansion and employment was 70.1 and 73.7 respectively. The BCI for overall costs was 29.2 indicating cost of inputs as a serious concern for SMEs. The BCI net profit margin was at 66.6 which reflected dominant effect of buoyant demand prospects over rising costs.