India’s services sector growth hits 14-month low in March amid rising cost pressures

India’s services sector growth slowed to a 14-month low in March, even as cost pressures rose sharply, according to HSBC and S&P Global PMI data. Firms reported the fastest increase in input prices in nearly four years.

The HSBC India Services PMI Business Activity Index fell to 57.5 in March from 58.1 in February, marking the weakest expansion in 14 months, though it remained above the long-run average of 54.4.

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The HSBC India Composite PMI Output Index declined to 57.0 in March from 58.9 in February, signalling the slowest expansion in private sector output since November 2022.

The data suggested that the slowdown in overall activity was primarily driven by softer domestic conditions, even as foreign sales continued to support growth.

Input cost inflation climbed to a 45-month high, driven by rising expenses for fuel, transport, food items, and labour, the report said.

Further, the survey noted that employment in the services sector rose for the third consecutive month, with job creation reaching its strongest pace since mid-2025.

Business confidence also improved, with firms reporting their highest level of optimism in nearly 12 years, supported by expectations of stronger demand and improved market conditions.

The survey also noted that firms passed on part of these higher costs to customers, with selling price inflation rising to a seven-month high.