India’s services sector grew at its slowest pace in 14 months during March, mirroring the slowdown in the growth of new business intakes, as West Asia conflict hit domestic demand, a private survey showed on Monday.
The HSBC India Services Purchasing Managers’ Index (PMI), compiled by S&P Global, fell to 57.5 in March from 58.1 in February, marking the weakest rate of expansion in 14 months but remaining above its long-run average of 54.4.
Despite the slowdown in growth, the sector saw a record increase in international orders, while input cost pressures remained at their most intense since mid-2022. While new business gains continued to underpin growth, according to panellists, output was constrained by the detrimental impact of the on demand, market conditions and tourism, the survey said.
The seasonally adjusted HSBC India Services PMI Business Activity Index is based on a single question: how the level of business activity compares with the previous month’s. According to the survey, intakes of new work rose at the slowest pace since January 2025. Softer increases in sales were noted in three of the four broad areas of the service economy, namely finance & insurance, real estate & business services, and transport, information & communication.
Record increase in export orders
Conversely, all four categories recorded quicker expansions in new export orders, causing overall growth in foreign sales to approach a series peak. Since the introduction of this question in September 2014, a faster increase was only noted in June 2024. Panelists noted gains from Africa, Asia, Australia, Europe, the Americas and the Middle East, the survey said.
Pranjul Bhandari, chief India economist at HSBC, said, “India’s services sector stayed in expansion [mode] in March, but growth momentum eased for a second consecutive month. Demand remained resilient, led by new export orders, which rose to their highest since mid-2024. As such, service providers’ expectations for future activity remained positive. However, input cost inflation accelerated to its fastest pace since 2022, indicating that higher fuel, transport and logistics costs are feeding into services.”
Of the four broad areas of the service economy monitored by the survey, the quickest increases in input costs and output charges were seen in consumer services and finance & insurance, respectively.
The latest report also showed a third consecutive monthly increase in employment. Moreover, the pace of job creation was the strongest since mid-2025 as an increase in business confidence boosted employment growth. Firms were at their most upbeat on the outlook for output in close to 12 years. This optimism was underpinned by hopes of an improvement in demand and market conditions, the survey said. Advertising and better customer relations were also expected to bear fruit.
The PMI data for March highlighted mild capacity pressures among services companies. This was evidenced by a marginal increase in outstanding business volumes – the third in as many months.
Composite PMI falls
The HSBC India Composite PMI Output Index also fell from 58.9 in February to 57.0 in March, marking the weakest rate of expansion in nearly three-and-a-half years. Service providers recorded a quicker upturn than manufacturers, though growth slowed in both cases. With new orders rising at softer rates among both goods producers and service providers, overall sales increased at the weakest pace since November 2023. The data showed the slowdown was centred on the domestic market as international demand for Indian goods and services grew at the fastest pace in seven months.
Cost pressures across the were at their most intense in just under four years. While services firms raised selling prices to a greater extent, manufacturers signalled the weakest uptick in two years. At the composite level, the rate of inflation was little-changed from last month, the survey noted.
Composite PMI indices are weighted averages of comparable manufacturing and services PMI indices. Weights reflect the relative sizes of the manufacturing and service sectors based on official .