CII's Business Confidence Index hits 5-quarter high: What's the reason?
What's the story
The Confederation of Indian Industry (CII) has reported a significant rise in its Business Confidence Index (BCI), which has hit a five-quarter high of 66.5 in Q3 FY26. This is the third consecutive quarter of growth for the index, reflecting an optimistic outlook among businesses regarding demand, profitability, and investment conditions. The survey was conducted during the first to third week of December 2025 and covered over 175 firms across different sectors and regions.
Demand surge
Domestic demand drives business confidence
The CII survey found that domestic demand is the main driver of business confidence. Two-thirds of firms reported an increase in demand during Q2 FY26, with 72% expecting further growth in Q3 FY26. This optimism is largely attributed to GST rate cuts and festive consumption patterns. The index was derived from responses from industry groups in both public and private sectors across manufacturing and services sectors.
Growth expectations
Investment and hiring intentions remain strong
The survey also highlighted strong investment and hiring intentions among businesses. A significant 69% of respondents expect the Reserve Bank of India (RBI) to cut the repo rate by the end of Q4 FY26. This expectation exists alongside a boost in sales due to GST cuts effective from September 22, with over half of respondents anticipating their sales will increase by 5-20% in upcoming quarters.
Budget recommendations
CII's suggestions for Union Budget 2026-27
For the upcoming Union Budget, CII has recommended maintaining capital expenditure and launching a revitalized ₹150 lakh crore National Infrastructure Pipeline (NIP) 2.0. The focus should be on shovel-ready, revenue-generating projects, and also streamlined dispute-resolution mechanisms to accelerate infrastructure delivery and encourage private investment. CII has also proposed a ₹1,000 crore Digitization Fund to fast-track India's regulatory digitization efforts across various sectors.