India Services PMI Slows to 14-Month Low in March Amid Demand Pressures

India’s services sector growth moderated in March 2026, recording its slowest pace in 14 months. The HSBC India Services Purchasing Managers’ Index (PMI), compiled by S&P Global, declined to 57.5 from 58.1 in February.

Despite the slowdown, the reading remained above the preliminary estimate of 57.2 and continued to signal expansion. The data reflects easing domestic demand alongside persistent global and cost-related challenges.

Services PMI Trends and Key Indicators

The Services PMI fell to 57.5 in March 2026, marking the lowest level since January 2025. Although the index remained above the neutral 50 mark, it indicated a moderation in growth momentum.

The decline comes amid changing demand conditions and evolving global economic factors. The data suggests that while expansion continues, the pace has slowed compared to previous months.

Domestic Demand and Business Activity

New business growth slowed to its weakest pace since January 2025, indicating softer domestic demand conditions. Survey respondents cited increased competition, challenging market dynamics, and reduced consumer demand. The ongoing Middle East conflict also impacted tourism and overall business activity. These factors collectively contributed to the moderation in service sector expansion.

Overseas Demand and Export Orders

Growth in foreign orders remained strong despite domestic headwinds. Export demand rose to the second-highest level recorded since September 2014, reflecting resilient global demand for Indian services.

This growth was surpassed only by the peak recorded in June 2024. Strong overseas demand provided partial support to overall business activity during the month.

Cost Pressures and Pricing Trends

Input costs rose at the fastest pace in 45 months, indicating significant inflationary pressure on service providers. Firms increased prices charged to clients at the quickest rate in 7 months, although the rise lagged behind cost escalation.

This resulted in margin pressure, as businesses absorbed part of the higher costs. The widening gap between input costs and output prices highlights ongoing profitability challenges.

Read More: India IIP Growth Rises To 5.2% In February 2026 on Manufacturing Boost.

Conclusion

India’s services sector growth slowed in March 2026, with the PMI dropping to a 14-month low of 57.5. While domestic demand weakened, strong export orders continued to support the sector.

Rising input costs and partial price pass-through created margin pressures for firms. Overall, the data reflects a moderation in growth amid evolving demand and cost dynamics.

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