India’s services sector growth moderates in March

India’s services sector growth eased in March, weighed down by a slight slowdown in business activity and sales, while international orders saw their weakest expansion in 15 months, according to a private survey released on Friday.

The seasonally adjusted HSBC India Services Purchasing Managers’ Index (PMI), compiled by S&P Global, declined to 58.5 in March from 59 in February and 56.5 in January while remaining well above the 50-point threshold that separates expansion from contraction.

The index stood at 59.3 in December, 58.4 in November, 58.5 in October, and 57.7 in September.

According to the survey, March saw the slowest increase in external orders since December 2023.

Also Read: Manufacturing PMI rebounds—but don’t celebrate just yet

However, cost pressures receded to a five-month low, which, coupled with competitive conditions, curbed charge inflation, the survey said, adding that prices charged for the provision of services rose at the weakest rate since September 2021.

"Although below February's reading of 59.0, the headline index remained above its long-run average (54.2)," the survey added.

According to Pranjul Bhandari, chief India economist at HSBC, India's services PMI eased to 58.5 in March 2025, slightly lower than the previous month as domestic and international demand remained strong, though marginally softer sequentially.

"India recorded a 58.5 services PMI in March 2025, softening slightly from the month prior. Domestic and international demand remained fairly buoyant, despite being sequentially a tick lower than the month before," Bhandari said.

Also Read: Indian economy weakens in January as passenger vehicle sales, PMI lose momentum, shows Mint tracker

"Meanwhile, job creation and charge inflation both cooled during March. Looking ahead, business sentiment remains generally positive, but intensifying competition presents a significant challenge to many survey participants," she added.

Slowing growth

India’s services sector—a pillar of its economy—accounts for more than half of its gross domestic product (GDP).

The Indian economy expanded by 8.2% in 2023-24, buoyed by 7.8% growth in the January-March 2024 quarter and surpassing the Reserve Bank of India’s (RBI’s) 7% projection for the fiscal year.

However, momentum slowed the following year. GDP growth eased to 6.7% in the first quarter of 2024-25, its slowest pace in five quarters, before further decelerating to 5.4% in the second quarter—the slowest in nearly two years—amid sluggish manufacturing, subdued urban consumption, and lacklustre corporate earnings.

India’s economic growth engine saw a revival in the December quarter (Q3FY25), recovering from a low in the September quarter. Yet, the 6.2% GDP growth reported was the slowest since Q4FY23, barring one quarter—the previous one (Q2), when it came in at 5.6% (revised estimate).

India’s finance ministry recently said it expects the economy to grow at 6.5% in 2024-25, while the RBI estimates 6.6% growth, aided by rural consumption, government investment, and strong services exports.

Manufacturing growth rise

India’s manufacturing sector expanded at its fastest pace in eight months in March, driven by strong demand and a sharp rise in output.

The HSBC India Manufacturing PMI, compiled by S&P Global, rose to 58.1 in March from 56.3 in February and 57.7 in January. The index was 56.4 in December and 56.5 in November. A reading above 50 indicates expansion.

Composite output index

The HSBC India Composite Output Index increased to a seven-month high of 59.5 in March, from 58.8 in February, to signal another month of above-trend growth.

Also Read: Equity analysis: India’s billionaire boom isn’t a sign of a hunky-dory economy

"For both new business and output, rates of expansion were stronger in the manufacturing sector, where there was a pick-up in growth. Despite seeing a slowdown, service providers still registered substantial increases," the survey said.

"Business confidence and job creation nevertheless softened among goods producers and services companies," it added.