Amid global economic challenges, India's mid-market businesses continue to showcase remarkable resilience. Business optimism in India's economic outlook surged to 83% in Q2 2025, up from 79% in the previous quarter. Turnover and profitability expectations remain robust, with 86% of Indian businesses anticipating growth on both fronts.
Export expectations have remained steady at 74% in Q1 and Q2 2025, reflecting the growing role of Indian businesses in global trade. This continued export strength is underpinned by the country’s expanding domestic capabilities, supportive manufacturing policies, and substantial infrastructure investments through initiatives like the National Logistics Policy and PLI schemes. While India's international revenue expectations dipped slightly by 2%, this minor dip is relatively modest compared to the global outlook and likely reflects short-term caution amid global uncertainty.
Global economic outlook and mid-market expectations
On the international front, the global economic outlook for the remainder of 2025 remains subdued, with the Organisation for Economic Co-operation and Development (OECD) revising its growth forecast to 2.9% from 3.3% last year. Mid-market firms worldwide are moderating their expectations, with export and international revenue outlooks falling by 3.0% and 4.2%, respectively. Two-thirds of mid-market businesses worldwide still expect to increase turnover (66.1%) and profitability (63.1%) this year, with over half (54%) planning to raise their selling prices.
Evolving trade landscapes: New paths, new possibilities
The US administration's shift towards increased tariffs and trade restrictions on imports—and subsequent retaliatory tariffs—has led to heightened trade tensions between the US and many of its key partners, most notably the EU and China, contributing to rising economic uncertainty in the global mid-market (up 5pp to 60.5%). In India, 70% of mid-market businesses now cite heightened economic uncertainty, reflecting the ripple effects of shifting global dynamics. While we have seen markets recover well from similar global volatility in recent years, particularly in advanced economies, these key strategic shifts across global supply chains run the risk of becoming more permanent.[i] For Indian mid-market firms, this reinforces the need for agility, diversified market strategies, and proactive engagement with new trade corridors.
These challenges have prompted a surge in activity around finalising new trade agreements, which are slowly beginning to reshape how we view global commerce:
India and the EU are nearing the finalisation of a Free Trade Agreement to increase bilateral investment and reduce trade barriers in key sectors such as clean energy, digital services, and manufacturing.
India is also actively pursuing trade agreements with the UK, Canada, and Australia, each offering targeted opportunities for mid-market companies in IT, pharmaceuticals, agritech, and sustainability-linked sectors.
GCC-China Free Trade Agreement negotiations have been fast-tracked to facilitate and enhance trade amidst the threat of further tariffs and rising uncertainty.
The African Continental Free Trade Area holds the potential to significantly boost intra-African trade, with projections suggesting a 50% increase by the end of 2025.[ii]
We also continue to see marked regional differences across areas such as interest rates, with the Fed's cautious stance leading to the largest policy rate gap between it and the European Central Bank in over two years.[iii] All these shifts are driving uncertainty. However, they could also lead to strategic openings, allowing an agile and resilient mid-market to pivot, invest and capture emerging market opportunities.
A ‘wait and see’ economy: Large enterprises leave the door open
These shifting trade routes and growing regional differences have prompted a reaction from some of the world’s largest companies. Major expansion plans are being put on hold, and there's now a distinct internal focus.[iv] Ongoing global trade conflicts, election-driven volatility in key markets and the slower-than-expected recovery in major economies have all added to this cautious approach.
But this "wait and see" mindset among large enterprises presents a unique strategic opportunity—especially for India’s mid-market businesses. With their leaner structures, faster decision-making, and greater appetite for selective risk, Indian mid-market firms are well-positioned to fill the void. As global trade realigns and supply chains diversify away from traditional strongholds, first-mover advantages in newly accessible or underserved markets are up for grabs.
India’s ascent as a “China-plus-one” destination further amplifies this momentum. Policy-driven incentives, expanding logistics infrastructure, and a digitally enabled business ecosystem give Indian mid-sized companies the edge to integrate more deeply into global value chains. This is especially true for high-growth sectors such as clean energy, digital services, agritech, and health tech, where Indian firms can move quickly to establish a foothold while larger competitors hold back.
Mid-market agility: Seizing new opportunities
To help the mid-market take advantage of these opportunities, we suggest a five-point plan mid-market businesses can follow to enhance stability, amplify resilience and kickstart growth:
Prepare and run detailed scenario models tied to key trade routes. Model impacts on cost, access and compliance for multiple possible outcomes, based on issues such as a continued tariff pause or expediting proposed trade agreements.
Growth is only sustainable when it is underpinned by resilience. Review and update the business's operating model to ensure it can flex. Modular logistics, a diversified customer base, flexible supplier networks, and focused leadership can help you respond quickly to trade or regulatory policy shifts.
The next generation of trade agreements is increasingly focused on services and digital trade. This presents a huge opportunity for businesses to identify and prioritise trade corridors that remove non-tariff barriers for services or digital products. Tools like the OECD Services Trade Restrictiveness Index can offer useful guidance in identifying
61% of Indian mid-market businesses cite supply chains as a chief constraint. Indian businesses can use active and upcoming trade deals to streamline cross-border logistics, reduce compliance friction, and establish supplier ecosystems in regions such as South Asia, Africa, and the Gulf. Dual sourcing and formalised partnerships can improve agility and continuity.
Mobility frameworks and R&D collaboration are increasingly central aspects of modern trade deals. They present the opportunity to explore R&D incentives and new talent exchange mechanisms within active or pending trade agreements. Think beyond goods and access new skills, ideas, and partnerships across borders to create long-term advantages.
Shaping global growth: Stability through strategy
As larger firms continue to adopt a ‘wait and see’ approach, mid-market businesses are well-positioned to lead the next wave of international growth. Their size and flexibility give them a unique edge in navigating uncertainty and capitalising on the short-term volatility that continues to define the current global economy. Through strong market intelligence, detailed scenario planning, diversifying supply chains and engaging well locally, the mid-market can help chart a path out of economic malaise and spearhead a new wave of targeted, profitable and sustainable growth.
Trade in transition
Explore how mid-market firms can grow amid economic shifts while larger players take a ‘wait and see’ approach.
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i. Sustaining The Recovery - IMF
ii. Africa’s regional ambitions and global trade realities – Economist Impact
iii. Fed tests limits of 'wait and see' - Reuters
iv. Risks to euro area financial stability from trade tensions – European Central Bank