NEW DELHI: India’s service providers recorded a loss of growth momentum in March with HSBC India Services Business Activity Index, or services PMI for the month falling to 58.5 from 59.0 in February, but was higher than a preliminary estimate that showed a fall to 57.7. However, it was comfortably above the neutral mark of 50.0 and indicated a sharp rate of expansion.
Pranjul Bhandari, Chief India Economist at HSBC, said, “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.”
Economic conditions across India’s service sector remained favourable at the end of FY25, as demand strength and new business gains continued to underpin activity growth. Although softer than in November, rates of expansion were historically sharp. Notably, S&P Global said, March’s results showed the slowest increase in external orders since December 2023.
According to the survey participants, output was driven by strong underlying demand and continued growth in new business. Although sales increased at a slower rate compared to February, the rise remained significant, it added.
In terms of sectors, Finance & Insurance exhibited the strongest growth trends in business activity and sales, followed by Consumer Services.
Per the survey release, foreign demand softened and international orders rose at the slowest pace in 15 months, signaling potential vulnerabilities to global economic shifts including from US President Donald Trump’s recently announced tariff measures. Fierce competition and fading cost pressures suppressed charge inflation in March. Output prices rose at the weakest rate in three-and-a-half years.
With the heightened competition, not only price pressures were restricted but it was also identified by panellists as the main challenge to output prospects. The level of positive sentiment slipped to a seven-month low and was below its long-run average.
The pace of hiring across the services economy was also slowed to the lowest in just under a year. Several companies suggested that they had sufficient capacity for current requirements. Pranjul Bhandari said, “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.”
Meanwhile, India’s private sector activity continued to rise strongly in March, as companies welcomed a further upturn in new orders. Moreover, the HSBC India Composite PMI Output Index increased to a seven-month high of 59.5, from 58.8 in February, to signal another month of above-trend growth.
Source: The Financial Express
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