India’s business sentiment rebounded in the July–September quarter (Q2) of FY 2026–27 after declining for four consecutive quarters. The Business Confidence Index (BCI) rose to 107.8 in Q2 from 99.8 in the preceding quarter. The findings were released by the National Council of Applied Economic Research (NCAER) in its 138th round of the Business Expectations Survey (BES).
Consequently, the rebound provides a positive signal ahead of the festive season. However, the index remains lower than the 142.6 recorded during the corresponding quarter of the previous fiscal year. The survey gathered responses from 502 companies across six major commercial hubs: Delhi-NCR, Mumbai, Pune, Kolkata, Bengaluru, and Chennai.
NCAER BUSINESS CONFIDENCE INDEX (BCI) RECOVERY
+-----------------------------------------------------------+
| Q2 FY26 (Corresponding Period) |
| 142.6 BCI |
+-----------------------------+-----------------------------+
|
v
+-----------------------------------------------------------+
| Q1 FY27 (Preceding Quarter) |
| 99.8 BCI |
+-----------------------------+-----------------------------+
|
v
+-----------------------------------------------------------+
| Q2 FY27 (Current Quarter) |
| 107.8 BCI |
+-----------------------------+-----------------------------+
Broad-Based Gains Across Core Indicators
All four constituent indicators of the Business Confidence Index registered positive quarter-on-quarter movement. Specifically, the share of firms expecting overall economic conditions to improve over the next six months rose to 50 per cent from 43 per cent in Q1.
Similarly, expectations regarding firms’ own financial position improved. The proportion of respondents expecting better financial health increased to 41 per cent from 37 per cent.
+--------------------------------+-----------------------+-----------------------+
| BCI Component Indicator | Q1 FY27 Share (%) | Q2 FY27 Share (%) |
+--------------------------------+-----------------------+-----------------------+
| Macroeconomic Outlook | 43% | 50% |
| Firm Financial Position | 37% | 41% |
| Positive Investment Climate | 26% | 30% |
| Optimal Capacity Utilisation | 91% | 94% |
+--------------------------------+-----------------------+-----------------------+
Furthermore, sentiment regarding the investment climate strengthened. The share of companies viewing present investment conditions as positive rose to 30 per cent from 26 per cent. Additionally, firms expecting capacity utilisation to remain near or above optimal levels climbed to 94 per cent from 91 per cent.
MSMEs and Large Firms Log Recovery
Besides overall index gains, the survey indicated a broad-based recovery across enterprise sizes. Micro, Small, and Medium Enterprises (MSMEs) saw their BCI rise from 93 in Q1 to 100 in Q2. Meanwhile, the confidence index for large firms expanded from 111.6 to 120.3 during the same period.
Moreover, overall business prospects improved across domestic and export markets. Approximately 71 per cent of firms expected domestic sales to increase over the coming six months, up from 67 per cent in Q1.
Moderation in Input Cost Pressures
Additionally, cost pressures moderated across several key operational heads. The share of firms expecting raw material costs to rise over the next six months dropped to 60 per cent from 67 per cent in Q1.
Likewise, expectations of rising electricity costs fell to 33 per cent from 43 per cent. Labour cost pressure expectations also softened slightly, edging down to 33 per cent from 35 per cent.
Ultimately, the moderation in cost sentiments, combined with healthier demand expectations, offers a solid foundation for industrial activity in the second half of the fiscal year.
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