India services activity hits 5-month high in April on strong domestic demand: HSBC PMI

New Delhi: India's services activity accelerated to a five-month high in April, driven by stronger domestic demand and rising new orders, even as export business softened amid the West Asia conflict, according to a private survey released on Wednesday.

The HSBC India Services Business Activity Index rose to 58.8 in April from a 14-month low of 57.5 in March, and was slightly above 58.7 recorded in April 2025. A reading above 50 indicates expansion, while one below that signals contraction.


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"Activity and new orders strengthened, even as new export orders eased, suggesting that demand is rotating from overseas markets to domestic consumers amid the Middle East conflict," said Pranjul Bhandari, chief India economist at HSBC.

Manufacturing activity also gathered pace, with the manufacturing PMI rising to 54.7 in April from 53.9 in March.

India's composite PMI, which combines manufacturing and services activity, increased to 58.2 from 57. Despite the rise, the pace of growth remained among the slowest in around two-and-a-half years.

Bhandari said the increase in the composite PMI reflected renewed momentum across both sectors. Service providers remained optimistic about output growth over the next 12 months, supported by expectations of stronger demand, marketing efforts and higher client enquiries. However, confidence weakened from March levels due to concerns over the conflict and cost pressures.

Service companies reported higher operating expenses in April. Although inflationary pressures eased, they remained among the highest since November 2024.

Firms cited higher food (cooking oil, egg, meat and vegetables), gas and labour costs, along with gas shortages. Only part of the increase was passed on to consumers, with selling price rises remaining moderate.

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"Input cost inflation moderated but remained elevated, while output price inflation stayed subdued, indicating that some firms are absorbing higher costs rather than passing them on," said Bhandari.

Overall charge inflation eased to a three-month low. Rates of input and output price inflation were most pronounced in consumer services, transport and information & communication sectors.

Survey respondents also said competitive pricing, ecommerce growth and strong demand for relocation and logistics services supported sales growth.