---
title: "Indian Service Sector Growth Hits 53-Month Low Amid Fading Demand and Rivalry"
url: https://projectchintan.com/article/india-services-pmi-july-slowdown-demand-competition-428yk
publisher: Project Chintan
author: Project Chintan Newsroom
section: Business
published: 2026-08-05T16:50:57.000Z
modified: 2026-08-05T19:01:21.242Z
language: en-IN
---

# Indian Service Sector Growth Hits 53-Month Low Amid Fading Demand and Rivalry

July survey data indicates the Indian services industry expanded at its slowest pace since early 2022 due to cooling domestic and international orders. Despite the slowdown in activity, employment levels saw a moderate recovery as firms reported improved profit margins.

## Key takeaways

- The HSBC India Services PMI fell to 53.3 in July, marking the slowest expansion in 53 months.
- New business inflows reached their lowest rate since February 2022 as competition and order postponements grew.
- Service sector hiring showed a modest rebound, with stronger employment growth offsetting manufacturing slowdowns.
- Business confidence slipped to a seven-month low despite optimistic forecasts for tourism and future demand.

## Service Activity Hits Four-Year Low

The HSBC India Services PMI Business Activity Index dropped to 53.3 in July, down from 57.4 in June. This reading represents the weakest expansion for the sector in 53 months. While the index remains above the 50.0 threshold that separates growth from contraction, the momentum has slowed significantly. According to Pranjul Bhandari, chief India economist at HSBC, the easing of new business growth in both local and foreign markets follows several months of robust activity.

## Key Facts

- The July reading of 53.3 is the lowest for the services sector in four and a half years.
- New export orders moderated but maintained gains from the United Arab Emirates, the United Kingdom, and the United States.
- Employment improved from June's six-month low, though 92% of surveyed firms reported no change in staffing levels.
- The Composite PMI Output Index, which includes manufacturing data, fell to 54.3 in July from 57.1 in June.
- Input costs rose for fuel, labor, and technology, yet overall profit margins improved as firms raised selling prices.

## Economic Pressures and Confidence

Firms cited intense competition, softer market conditions, and the postponement of orders as primary barriers to growth. While input cost inflation for the private sector reached a six-month low, service providers specifically dealt with higher expenses for transportation and materials. Despite these hurdles, businesses remained optimistic about future demand and a potential rise in inbound tourism. However, this positive sentiment reached its lowest level in seven months during July.

## Manufacturing vs. Services

The broader economic picture showed a divergence between sectors. While the service economy experienced a sharp slowdown, factory production growth edged slightly higher. Notably, the service sector's increased hiring efforts helped offset slower job creation in the manufacturing segment, leading to an overall faster rate of employment growth at the composite level. Selling charges across the private sector increased at the quickest rate since April as businesses passed on costs to consumers.

Source: The Hindu — Economy

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Canonical: https://projectchintan.com/article/india-services-pmi-july-slowdown-demand-competition-428yk
Reported from: The Hindu — Economy