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.