The Confederation of Indian Industry (CII) announced a significant uptick in business sentiment on Sunday. Its Business Confidence Index (BCI) climbed to 66.5 in the third quarter of the 2025-26 financial year. This marks the highest level in five quarters and represents the third consecutive quarterly rise.
Strong Domestic Demand Drives Optimism
Domestic demand continues to serve as the primary engine for growth. Nearly two-thirds of the surveyed firms reported higher demand in the second quarter of FY26. An even more optimistic 72 percent expect further improvement in the third quarter.
This positive outlook finds support in recent policy measures. The survey, cited by PTI, highlights the impact of GST rate cuts and robust festive season consumption as key factors boosting confidence.
Survey Methodology and Broader Sentiment
The CII-BCI survey draws from a sample of over 175 companies. It spans the manufacturing and services sectors, including micro, small, medium, and large enterprises from various regions. The survey was conducted during the first three weeks of December 2025.
Beyond demand, the findings reveal robust intentions for investment and hiring. A notable 69 percent of respondents anticipate the Reserve Bank of India will cut the repo rate by the end of the fourth quarter of FY26.
Impact of GST Cuts and Future Expectations
The survey specifically pointed to the positive effect of GST reductions that took effect on September 22. More than half of the firms, precisely 56.3 percent, expect their sales to increase between 5 and 20 percent in the coming quarters as a result.
Chandrajit Banerjee, Director General of CII, commented on the findings. He stated, "The steady rise in business confidence shows industry's ability to navigate external headwinds. This is anchored by resilient domestic demand and a robust reform agenda." Banerjee added that growth momentum is expected to strengthen further in the coming months.
Looking Ahead to the Union Budget
As the Union Budget for 2026-27 approaches, CII expressed confidence that the reform momentum will continue. The industry body put forward several suggestions to sustain growth.
Key proposals include maintaining high levels of capital expenditure. CII suggested launching a revitalised National Infrastructure Pipeline 2.0, with a projected outlay of Rs 150 lakh crore. The focus would be on shovel-ready, revenue-generating projects to attract more private investment.
Proposals for Long-Term Competitiveness
CII also outlined measures to enhance India's long-term economic competitiveness. These proposals aim to support the country's broader growth ambitions.
The recommendations include creating strategic funding platforms, accelerating regulatory digitisation, fostering innovation-led growth, and strengthening the banking ecosystem. These steps are seen as crucial for building a more resilient and dynamic business environment.
