India's business sentiment holds firm in Q4 FY25; firms signal optimism on demand and hiring: NCAER
New Delhi: India’s business sentiment remained strong in the fourth quarter of FY25, with the NCAER Business Confidence Index (BCI) inching up to 139.3 from 138.4 in the previous quarter, according to the National Council of Applied Economic Research.
The reading was also slightly above the year-ago level of 138.2, signalling sustained economic momentum despite some moderation.
The BCI is based on four components- ‘overall economic conditions to improve in next six months’; ‘financial position of the firms will improve in next six months’; ‘present investment climate’; and ‘whether present capacity utilisation was close to or above optimal
level’.
These four components exhibited mixed trends.
The share of firms perceiving that ‘present investment climate is positive’ increased from 51.2 percent in 2024―25:Q3 to 55.6 percent in Q4.
The share of firms expecting their own ‘financial position to improve in next six months’ remained unchanged between the two quarters (59.3 percent in Q3 and 59.2 percent in Q4).
The share of firms expecting ‘overall economic conditions to improve in next six months’ declined marginally from 66.3 percent in Q3 to 64.7 percent in Q4.
About 96.4 percent of the firms perceived present capacity utilisation being close to or above optimal level in Q4.
Majority of the firms expected domestic production (72.5 percent) and domestic sales (75.6 percent) to increase in the next six months.
Sentiments about exports of final products moderated in 2024―25:Q4 (57.8 percent) compared to Q3 (62 percent) signalling weak external demand.
In case of imports of raw materials, the percentage share of firms expecting it to rise increased from 43.3 percent in Q3 to 46.1 percent in Q4, indicating a buoyancy in domestic demand.
The labour market outlook also showed buoyancy.
A larger share of firms plan to hire both skilled and unskilled workers in the coming months.
Expectations of wage hikes surged, with 70% of firms foreseeing increases for skilled workers and 68% for unskilled workers—up from 56.2% and 57.6%, respectively.
Cost pressures may persist, as more firms anticipate rising input costs, especially for raw materials and labour.
The findings are based on NCAER’s 132nd quarterly Business Expectations Survey conducted in March 2025, covering 448 firms across six cities.
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