India’s services sector saw its slowest expansion in 11 months in December 2025, with the HSBC India Services Purchasing Managers’ Index (PMI) falling to 58.0 from 59.8 in November, according to S&P Global data. Although growth moderated, it remained strong, as the index stayed well above the neutral 50 mark — readings above 50 indicate expansion, below 50 signal contraction, and 50 represents no change.

Pollyanna De Lima, economics associate director at S&P Global Market Intelligence, noted, “India’s service sector continued to perform well in December, but the decline in several survey indicators suggests that growth may ease in the coming months.” She added that the relatively low inflation environment is favorable, as mild expense increases allow firms to stay competitive, limit price hikes, boost sales, and create jobs. New business continued to rise but at the slowest pace in 11 months. While demand was supported by competitive pricing and consistent client interest, growth was limited as customers had more alternatives, including lower-cost providers.

Export demand strengthened, with services firms reporting higher orders from Asia, North America, the Middle East, and the UK. New export business expanded faster than in November. De Lima commented that while companies expressed concerns about market uncertainty and exchange rate fluctuations, the weaker rupee likely made exports more competitive, supporting growth in overseas orders despite slowing domestic demand.

Hiring activity stalled in December, with most firms keeping staffing levels steady and a few reporting minor layoffs. Limited pressure on operating capacity reduced the need to hire additional workers. Although services firms remained optimistic about 2026, overall sentiment fell for the third consecutive month, reaching its lowest level in nearly three-and-a-half years due to market uncertainty and currency concerns.

The HSBC India Composite PMI, which covers both manufacturing and services, dropped to 57.8 in December from 59.7 in November, its lowest reading since January 2025. Private sector job creation stagnated, and input and output costs rose only modestly. Despite this, businesses remained positive about future growth, although overall confidence fell to a 41-month low.
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India’s manufacturing sector continued to expand in December, albeit at a slower pace, as the HSBC Manufacturing Purchasing Managers’ Index (PMI) declined to 55.0 from 56.6 in November, marking a 38-month low, according to S&P Global. Despite the drop, the index remained well above the 50-point mark that separates growth from contraction.

Pollyanna De Lima, economics associate director at S&P Global Market Intelligence, noted that the sector ended the year on a solid footing despite the slowdown. She highlighted that the rise in new business should keep companies busy in the final fiscal quarter, while the absence of major inflationary pressures could continue to support demand.

New business continued to grow in December, but the pace was the slowest since December 2023. Factory output also expanded, though at its weakest rate since October 2022. The slower increase in orders prompted companies to be more cautious in purchasing raw materials, even though overall buying still rose.

Growth in export orders weakened during the month, with international demand increasing at its slowest pace in 14 months. Manufacturers who saw growth attributed it primarily to stronger demand from Asia, Europe, and the Middle East. De Lima pointed out that the share of companies reporting higher international sales in December was about half the 2025 average, with exports largely confined to fewer markets. She added that with Indian manufacturers facing lower cost pressures than elsewhere, competitive pricing could help attract new business from other regions in the year ahead.

Job creation remained muted as manufacturers added only a small number of workers, marking the weakest increase since the current growth phase began in March 2024. Slightly higher unfinished work suggested that companies were generally able to manage workloads with existing capacity. While manufacturers remain optimistic about output growth in 2026, overall confidence fell to its lowest level in nearly three-and-a-half years. Although steady demand, advertising, and new product launches provide some support, concerns about strong competition and market uncertainty persist.
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Prime Minister Narendra Modi on Thursday highlighted that the Comprehensive Economic Partnership Agreement (CEPA) between India and Oman will bring renewed confidence and energy to the bilateral relationship. Speaking at the India-Oman Business Summit, he noted that the gathering would chart a fresh course for cooperation between the two nations. “Today, we are taking a historic step whose impact will resonate for decades. The CEPA will inject new confidence and momentum into our partnership in the 21st century,” Modi said.

He emphasized India’s progressive and self-reliant nature, noting that as India grows, it also helps its partners prosper. Modi pointed out that India is on track to become the world’s third-largest economy, which benefits the global community and holds particular significance for Oman. He underlined the close ties between the two countries, describing them as not only friends but also maritime neighbors with generations of mutual trust and a deep understanding of each other’s markets.

Modi invited Omani companies to participate in India’s growth story, highlighting the nation’s rapid economic expansion. He attributed this growth to structural reforms over the past 11 years, including the implementation of GST and the Insolvency and Bankruptcy Code (IBC), which have transformed India’s economic framework.

The Prime Minister arrived in Oman on Wednesday for a two-day visit. During 2024-25, bilateral trade between India and Oman reached approximately USD 10.5 billion, with exports of USD 4 billion and imports of USD 6.54 billion. Modi expressed optimism that the CEPA and ongoing collaboration would create new avenues for business and strengthen the historic partnership between the two nations.
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Union Finance Minister Nirmala Sitharaman on Wednesday stated that lowering the debt-to-GDP ratio will be a major priority for the government in the upcoming financial year. Speaking at the Times Network India Economic Conclave, she emphasized the need to further reduce the ratio, which had crossed 60 percent during the Covid-19 period. While the figure has begun to decline, she said sustained efforts are required to bring it down further.

Sitharaman also called on state governments to take similar steps to manage their debt levels. Referring to RBI data, she noted that debt accumulation in certain regions is concerning, although she did not name specific states. She warned that unless high-interest debt is reduced to manageable levels, achieving the goal of a developed India, or Viksit Bharat, would be challenging.

The finance minister said the Centre is working to strengthen the bond market to enable smoother fund flows. She credited policy stability under Prime Minister Narendra Modi for building investor confidence and enabling effective negotiations. She reiterated that maintaining fiscal discipline remains a continuous priority.

On global trade, Sitharaman remarked that trade conditions are neither fair nor free, with tariffs increasingly being used as strategic tools. She said India contributes roughly a quarter of global trade and must navigate the evolving geopolitical landscape carefully. While India seeks to protect its economy and industries, it has not aimed to weaponise tariffs, unlike some emerging global players.

Highlighting sectoral growth, Sitharaman praised the services sector for driving nearly 60 percent of GDP growth, noting that it extends beyond IT to areas like tourism and hospitality. She said the government is creating conditions that allow all sectors, including manufacturing, to grow and compete globally.

To boost private sector participation, she stressed the importance of helping businesses expand, create jobs, and contribute more to GDP. She added that the reduction in corporate tax rates was a necessary step. Welcoming the rise of global capability centres and data centres, she underlined the need for energy security and said the government is investing in nuclear power, including small modular reactors, as a clean energy source alongside renewables.

Sitharaman also highlighted the growing entrepreneurial momentum in smaller towns and rural areas, noting that local businesses are supporting regional economies while aiming for global markets. She said the government is focused on nurturing entrepreneurial talent and expanding access to credit. Concluding, she said India has managed geo-economic challenges effectively and that the resilience shown by its people, especially during the Covid period, deserves recognition.
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Disclaimer: This podcast is taken from CNA.

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Disclaimer: This Podcast is taken from CNA.

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Disclaimer: This Podcast is taken from CNA.

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Disclaimer: This Podcast is taken from CNA.