India's services sector growth improves slightly in April on new order inflows

India's service sector accelerates in April, driven by new orders, employment growth, and improved international demand, boosting confidence.

India’s service sector activity grew marginally in April as compared to the previous month, according to a survey of private sector companies. The improved activity was driven by a surge in new orders, notably from the U.S., and an easing of cost pressures.

The HSBC India Services PMI Business Activity Index, calculated based on a single question of how the level of business activity compares with the situation the month before, came in at 58.7 in April, up from 58.5 in March. This, HSBC India said in its report, continued to remain higher than India’s long-term average of 54.2.

“The overall expansion in output was fuelled by a significant rise in new business intakes, the joint-best in eight months, with many firms noting favourable demand conditions and successful marketing efforts,” the report said. “In some instances, efficiency gains reportedly enabled companies to take on more work.”

Orders placed with Indian companies originated in Asia, Europe, the Middle East and with the US “particularly cited as sources of strength”.

“New export orders gained momentum after taking a breather in March, accelerating at its fastest pace since July 2024,” Pranjul Bhandari, Chief India Economist at HSBC said in the report. “Margins improved as cost pressures eased and prices charged rose at a faster pace.”

Notably, the strong export demand for Indian services comes on the back of a similar trend for India’s manufacturing sector in April. According to HSBC’s India Manufacturing PMI, released on May 2, new business from abroad in April for the manufacturing sector grew at its second-fastest rate in over 14 years.

However, Ms Bhandari added that, while Indian services firms remained optimistic about future growth, their confidence “waned slightly”.