Crisil Report: Indian MSMEs Face Greater Revenue Declines Due to West Asia Conflict
MSMEs to bear bigger hit than large firms from West Asia conflict: Crisil
Image: The Economic Times
A Crisil report indicates that Indian small and medium enterprises (MSMEs) will experience a 100 basis points revenue decline this fiscal year due to the ongoing West Asia crisis. The challenges include production cuts, raw material shortages, and increased costs affecting profit margins.
- 01MSMEs are projected to see a revenue decline of 100 basis points this fiscal year due to the West Asia conflict.
- 02The Ebitda margin for MSMEs is expected to decrease by 50-100 basis points, reaching 5-5.5%.
- 03The Morbi ceramic tile cluster, heavily reliant on gas, will experience a drop in revenue growth from 9-11% to 1-3% in fiscal 2027.
- 04Increasing diesel prices are anticipated to reduce margins for MSMEs in road construction by 50-100 basis points.
- 05Packaging costs are expected to pressure margins in the packaged foods sector, with a projected decline of 50-100 basis points.
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According to a report by Crisil, Indian small and medium enterprises (MSMEs) are set to bear the brunt of the ongoing West Asia crisis, facing a revenue decline of 100 basis points this fiscal year. The report highlights that MSMEs are grappling with production cuts and revenue losses due to reduced raw material availability, particularly gas. Furthermore, trade disruptions have led to margin compression, limiting their ability to pass on rising commodity and energy costs. While large enterprises saw a revenue decline of 0-1% during the COVID-19 pandemic, MSMEs experienced a more significant drop of 3-5%. The Ebitda margin for MSMEs is projected to decline by 50-100 basis points, reaching 5-5.5%. Notably, the Morbi ceramic tile cluster, which relies heavily on gas, will see its revenue growth plummet from 9-11% to 1-3% in fiscal 2027. Additionally, rising diesel prices and packaging costs are expected to further strain margins in sectors like road construction and packaged foods, respectively.
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The revenue and margin declines for MSMEs will likely lead to reduced profitability and potential job losses in sectors heavily reliant on gas and energy.
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More about Crisil
Crisil Forecasts Persistent High Input Costs Despite Potential Hormuz Reopening
The Economic Times • May 28, 2026
Divergence in India's Wholesale and Retail Inflation Amid West Asia Conflict
Business Standard • May 15, 2026
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