India’s services sector maintained strong growth momentum in January, with the HSBC India Services Purchasing Managers’ Index (PMI) edging up to 58.5 from 58.0 in December 2025, according to data compiled by S&P Global. The uptick shows a recovery in growth conditions driven by firmer, faster gains in new business and improved business sentiment. 

As per the data, the seasonally adjusted Services PMI Business Activity Index, which tracks month-on-month changes in output, rose to a two-month high of 58.5 from December’s recent low of 58.0. The reading remains well above the neutral 50-mark, indicating a historically sharp rate of expansion in the sector. 

Service providers reported quicker expansions in output and new business intakes during the month, reversing the slowdown seen toward the end of 2025. Survey participants cited demand buoyancy, stronger client interest and continued technology investments as key factors supporting growth. A stronger online presence and effective marketing strategies also helped firms attract new customers and lift sales. 

New orders increased at the fastest pace in two months, after growth had eased to an 11-month low in December. International demand also showed improvement, with firms reporting higher inflows of overseas business, particularly from South and Southeast Asia. 

Improved demand conditions

Improved demand conditions encouraged service providers to step up hiring in January, leading to a renewed increase in employment levels across the sector. Business confidence strengthened as well, with firms expressing greater optimism about future activity on expectations of efficiency gains, client acquisitions and sustained demand. 

On the pricing front, inflationary pressures picked up modestly. Input costs and selling prices rose at a quicker pace than in December, though increases remained moderate and well below historical averages, the survey showed. 

Pranjul Bhandari, Chief India Economist at HSBC, said the rise in the services PMI signalled “sustained momentum” in the sector. “Robust output growth was driven by a steady influx of new orders, including increased international demand,” she said, adding that business confidence climbed to a three-month high. While input and output prices are rising, Bhandari noted that cost pressures remain fairly mild by historical standards. 

Positive trends

The positive trends were echoed across the broader private sector, with quicker increases in output and new orders supporting job creation, and firmer sentiment. The composite PMI also strengthened in January, reflecting solid demand growth across both manufacturing and services, underscoring the resilience of India’s economic recovery.