India’s services sector soared in July 2025, as the HSBC India Services Purchasing Managers’ Index (PMI) climbed to 60.5—its highest in 11 months and up from 60.4 in June. A PMI score above 50 shows the industry is expanding, signalling robust momentum. The major driving force behind this surge was a sharp increase in export demand. Indian service providers reported more orders from Asia, Europe, the UAE, Canada, and the U.S., with the export sub-index recording its second-best performance of the year. Domestically, effective advertising, onboarding new clients, and the sector’s expanding digital reach also boosted new orders and overall activity.
Hiring Slows Amid Rising Costs
While India’s services companies enjoyed strong order books, job growth slowed in July. Fewer than 2% of firms surveyed reported hiring, marking the weakest pace in over a year. Analysts suggest that businesses are cautious about adding new staff, possibly due to increased input costs for essentials like food, transport, and labour. Despite these cost pressures, many firms managed to raise prices for their services at a rate faster than their input price climbs, highlighting solid demand and pricing power. Finance and insurance stood out as the fastest-growing industries, whereas real estate and business services lagged. Many companies are leveraging technology and digital tools to boost productivity instead of expanding their workforce.
Positive Outlook Despite Challenges
Business sentiment in India’s services sector remained upbeat, underpinned by efficiency gains, better marketing, and innovation. However, challenges persist: hiring momentum is softening, and companies are facing rising expenses. Still, optimism about future growth is supported by strong domestic and global demand. This robust PMI data is closely followed by the Reserve Bank of India, which watches such trends when making monetary policy decisions. The composite PMI—which tracks both services and manufacturing—also reached 61.1 in July, indicating the fastest expansion since April 2024 and highlighting strength in India’s broader private sector. As costs rise and job growth slows, service companies may stay cautious, but the overall outlook remains positive for the months ahead.