Corporate confidence dips in Q2 FY26: India’s business sentiment slows amid US tariffs, global uncertainty – NCAER report
Business sentiments in India moderated in the second quarter (Q2) of FY 2025-26 after showing steady improvement over the past three quarters, according to a new report by the National Council of Applied Economic Research (NCAER).The decline comes amid high global uncertainties, including additional US tariffs and ongoing trade tensions, the think tank said in its latest Business Expectations Survey.NCAER highlighted that the period also saw key domestic policy developments such as GST reforms and tax rate reductions, whose positive effects are likely to be felt in the coming quarters.The Business Confidence Index (BCI) fell to 142.6 in Q2 2025-26 from 149.4 in the previous quarter. However, the report said confidence levels remained higher than during the same period last year, when the index stood at 134.3.The BCI is based on four factors: how the economy is expected to perform, how firms see their finances, the state of the investment climate and how much of their capacity companies are using.Report added that the decline this quarter was mainly due to weaker sentiment in three of the four areas, while capacity utilisation saw some improvement.“Overall, the share of positive responses remained above 50 per cent in the second quarter for all four components, signalling a relatively slower growth momentum,” the report added.The survey, conducted in September 2025, covered 484 companies across six cities, shortly after the US administration announced new tariffs on Indian goods.NCAER researcher Professor Bornali Bhandari, who led the study, said that overall economic sentiments were hit harder than firm-level indicators. She added that the impact of global trade developments was more visible among larger businesses.Sentiments also differed by company size. The confidence index for micro, small and medium enterprises (MSMEs) rose slightly from 137 in Q1 to 138 in Q2, while the index for large firms dropped sharply from 171.6 to 149.9.
