Business confidence among Indian industry rose for the third consecutive quarter in the October–December period, supported by the economy's resilience amid global uncertainty and expectations of further reforms, a survey by industry body Confederation of Indian Industry (CII) showed.

CII's Business Confidence Index rose to 66.5 in the December quarter, its highest level in five quarters, the industry body said in a statement. The index stood at 66.2 in the same quarter a year ago.

"This marks the highest level recorded in the last five quarters, reflecting a sustained improvement in business sentiment. The sequential uptick in confidence is indicative of improving demand conditions, greater clarity on policy direction, and continued optimism around investment, profitability and capacity expansion plans," the survey noted.

Demand drivers

Domestic demand remains the key driver, aided by GST rate cuts and festive consumption, while investment and hiring intentions remain robust, the survey showed.

Driven by reforms, India has shown remarkable resilience amid global uncertainty shaped by geopolitical tensions, trade weaponization and a slowing world economy, CII said.

Domestic demand continues to anchor confidence, with two-thirds of firms reporting higher demand in the September quarter and 72% expecting further growth in the December quarter, according to the survey.

The index is based on a survey of more than 175 firms, conducted between the first and third week of December 2025. The sample covers all industry sectors, including micro, small, medium and large enterprises, across regions.

"The steady rise in business confidence shows industry's ability to navigate external headwinds, anchored by resilient domestic demand and a robust reform agenda," the statement said, quoting CII Director General Chandrajit Banerjee. Industry anticipates the growth momentum to strengthen further in the months ahead, he added.

Budget expectations

"CII is confident that the reform momentum will continue in the forthcoming Union Budget and has made several recommendations as it continues to engage with the policymakers on the next set of reforms," the statement said.

CII is pushing for the Centre to sustain capital expenditure under the ₹150 trillion National Infrastructure Pipeline.

"The focus should be on shovel-ready, revenue-generating projects and streamlined dispute-resolution mechanisms to accelerate infrastructure delivery and crowd-in private investment," the statement said.

Growth outlook

As India moves into the next decade, the need for reforms remains clear, the lobby group said. Continued investment in infrastructure and digital systems, regulatory simplification, expanding household opportunities and strengthening business research capabilities will help unlock further economic potential.

India is projected to grow 7.4% in the current financial year, supported by strong manufacturing and services output, healthy household spending and firm fixed investment, according to the government's first advance estimates, which revised up the earlier 6.3–6.8% projection.

While real GDP growth has improved, nominal growth is expected to lag the 10.1% assumed in the Union Budget and is projected at around 8%.

CII is also pitching for funding mechanisms to mobilize domestic institutional capital and foreign investment to support small businesses, the energy transition, human capital and overseas acquisitions.

Rating agency ICRA Ltd. said on Friday it expects the Centre to raise capital expenditure to ₹13.1 trillion in FY27, from ₹11.21 trillion projected for FY26, before fiscal pressures rise from FY28 due to higher committed spending linked to the Eighth Central Pay Commission recommendations.