India’s service economy grew at its fastest pace in three months in September, driven by domestic demand and a rise in new business inflows, a private survey showed on Tuesday.
The seasonally adjusted HSBC India Services Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 55.2 in September from 54.1 in August. A reading above 50 indicates expansion.
Despite the uptick, growth across the quarter remained the weakest since March 2022.
Companies reported improving sales performance following increased demand in digital solutions, food, insurance, loans, software, transportation, tours and travel, the survey said.
Finance, insurance, and consumer services recorded the strongest expansions in both activity and sales.
Positive demand trends during the month also supported employment, although job creation eased from August. Softer hiring was seen among and business services firms, the survey said.
While international orders from Germany, the UAE, the UK, and the US continued to grow, new export business expanded at its slowest pace in nearly three years, the services survey said.
“Export business continued to expand, although the pace of growth slowed. Input-cost pressures on service providers eased to a 10-month low, reducing the need to raise selling prices,” said Pranjul Bhandari, chief India economist at HSBC. “The outlook remained positive, with service providers reporting improved expectations for future activity for the second consecutive month,” Bhandari added.
According to the survey, cost pressures subsided at the end of the second fiscal quarter, with the rate of input price inflation retreating to its weakest since November 2025.
The survey noted that Indian services companies remained optimistic about the year ahead, supported by resilient demand and rising customer enquiries. However, under 16% of respondents expect output to increase over the next 12 months.
Business confidence
Meanwhile, business confidence strengthened to a three-month high, though it remained subdued by historical standards, the survey said.
September data showed that a stronger expansion in new orders underpinned a quicker increase in private sector activity and sustained growth.
Reflecting the strong upturn in private sector output since June, the HSBC India Composite Output Index rose to 55.9 in September, from 54.3 in August. Reinstatement of job creation in the manufacturing industry and sustained growth at service providers resulted in larger employment at the composite level.
The average for the second fiscal quarter was, however, the lowest since the three months to March 2022, the survey said.