Why India Inc is more confident about growth in Q2FY27: CII survey

Business confidence among Indian companies improved sharply in the July-September quarter, with the CII Business Confidence Index (BCI) rising to 66.0 in Q2FY27 from 60.8 in Q1, according to the Confederation of Indian Industry’s 136th Business Outlook Survey.

The survey attributed the improvement primarily to easing disruptions from the West Asia conflict.

The Expectation Index surged to 67.7 from 60.6, while the Current Situation Index rose to 62.6 from 61.2. The gap between the two suggests that companies expect business conditions in the quarter ahead to be materially better than those in the previous quarter.

The survey, conducted between July 23 and August 24 among 238 firms across sectors and regions, comes after India’s real GDP grew 7.8% in Q1FY27. CII said the improvement in business sentiment indicates that the strength seen in macroeconomic indicators is increasingly translating into firm-level performance.

 

Domestic demand, capacity utilisation outlook improves

Around 61% of respondents expect domestic demand to rise in Q2FY27, while only 9.6% expect a moderation. The proportion expecting demand growth of more than 20% also increased to 16% from 12.9% in Q1FY27.

The stronger demand outlook is also reflected in capacity utilisation expectations. More than half of respondents expect capacity utilisation to exceed 80% in H2 2026, compared with 36.6% in H1. CII said this could support a pickup in fresh private-sector investment.

 

RBI rate cut expected

The survey also showed an easing bias among businesses, with 56.3% of respondents expecting an RBI rate cut over the next six months. Of these, 27.7% expect a single 25-basis-point cut, while 28.6% expect cumulative cuts of 50 bps or more.

Meanwhile, 53% of firms plan to increase their workforce in Q2FY27, including 18.5% that expect to expand headcount by more than 10%. Only 8.4% anticipate a reduction in workforce.

 

Global trade uncertainty remains biggest risk

Despite the stronger outlook, global risks remain a concern. Global trade uncertainty was identified as the biggest macroeconomic risk by 34.3% of respondents, followed by commodity price volatility at 19.5%.

Weak domestic demand was cited by 16.1%, weak or uneven monsoons by 15.7%, and exchange-rate volatility by 14.4% of respondents.