Likely one of two things you need to try:
Adjust the squelch.
Make sure mic clip is grounded. You can check to see if this is the issue by touching the metal button on the back of the microphone to something that is grounded to the chassis. If the radio was installed correctly, you should be able to touch it to the bare metal of the radio body. If the indicator disappears, then there is your issue.
If it doesn't, could be a bad mic cord, or could be a different issue. But it's a good easy thing to check first.