India's dominant services sector witnessed a significant deceleration in its growth momentum during October 2025, recording the slowest pace of expansion in the last five months. The seasonally adjusted HSBC India Services Business Activity Index, a key indicator of the sector's health, dropped to 58.9 in October from 60.9 in September.
This moderation, while still indicating robust expansion as the index remained above the 50-point threshold that separates growth from contraction, was largely driven by heightened competitive pressures and disruptions caused by heavy rainfall across several regions of the country.
According to the monthly survey released on Thursday, November 6, 2025, these factors constrained output expansion despite resilient demand and continued support from Goods and Services Tax (GST) related relief measures. While new business inflows continued to expand sharply, the rate of increase was the weakest in five months, with some firms citing floods and landslides as contributing to the disruptions. International demand for Indian services also improved, though the growth rate was the slowest since March.
On a positive note, inflationary pressures within the services sector eased considerably. Input costs and output charges rose at their slowest pace in 14 and seven months, respectively. This easing of price pressures was aided by GST reforms and favorable supply conditions, providing a more stable cost environment for businesses.
In terms of employment, companies continued to recruit additional staff in October to manage rising new business intake and meet delivery timelines. However, the pace of employment growth was one of the softest in 18 months. Business confidence remained high, with firms expressing strong optimism about increased production over the next 12 months, driven by customer acquisition efforts and operational stability.
The HSBC India Composite PMI Output Index, which combines both manufacturing and services activity, also reflected this slowdown, falling from 61 in September to 60.4 in October, marking the softest increase since May. This suggests a broader moderation in overall economic activity, albeit still within an expansionary phase.