India’s service sector showed strength in December, with the HSBC India Services PMI Business Activity Index slightly easing to 58 from 59.8 in November 2025. Despite the slight dip, the index remained comfortably above the neutral level, indicating robust growth. The report highlighted that the rate of expansion in new work and output moderated compared to the previous 11 months as companies were cautious about hiring.
The report, compiled by S&P Global, revealed that new work and export orders increased at rates exceeding expectations, with notable gains from regions like Asia, North America, the Middle East, and the UK. Companies experienced faster growth in input costs and output charges compared to the previous month, although inflation rates remained below long-term averages.
The growth in new orders and output was attributed to competitive pricing, strong demand, and positive client interest. However, companies noted that growth was constrained by increased competition from alternative providers offering cheaper services. Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence, mentioned that while India’s service sector performed well in December, the moderation in several survey indicators towards the end of 2025 might indicate a slowdown in growth as the new year begins.
Pollyanna highlighted the positive impact of India’s benign inflation environment on the service sector, suggesting that if expenses remain stable, firms could limit price increases, potentially boosting sales and job creation. Despite recent rupee depreciation leading to higher import costs, it enhanced export competitiveness. The report also noted that services exports saw significant growth in December, contrasting with the overall trend of slowing growth.
Looking ahead, private sector companies expressed optimism about growth prospects, although sentiment levels dipped to a 41-month low, signaling some caution in the market.
