India’s services sector slowed in December, suggesting that the strong growth seen through most of 2025 may be easing as the new year begins.
A survey released on Tuesday showed that the HSBC India Services Purchasing Managers’ Index (PMI) fell to 58 in December 2025 from 59.8 in November, its weakest reading in 11 months. Even so, the number remained well above the 50 mark, which means the sector is still growing and has not entered a slowdown phase.
For businesses and consumers, this signals a cooling, not a collapse. Demand for services such as IT, finance, hospitality and professional services is still rising, but at a slower pace than before. Analysts say this could mean more cautious spending by clients as they weigh costs and explore cheaper alternatives.
One key concern was new business. While fresh orders continued to grow, the pace was the slowest in nearly a year. Companies said customers are becoming more price-sensitive and now have more choices, including lower-cost service providers. This has limited how fast companies can expand.
The good news came from exports. Overseas demand improved in December, with firms reporting higher orders from Asia, North America, the Middle East and the UK. A weaker rupee may have helped Indian service providers become more competitive globally, even though it increased some import-related costs.
Jobs were another weak spot. Hiring activity stalled during the month, with most companies choosing to maintain existing staff levels. Firms said they were not under pressure to expand capacity, reducing the need for fresh recruitment in the short term.
The wider economy also showed signs of moderation. The HSBC India Composite PMI, which tracks both manufacturing and services, slipped to 57.8 from 59.7, its lowest level since January 2025.
Overall, businesses remain positive about growth in 2026, but confidence has weakened. Market uncertainty and currency movements have made companies more cautious, pointing to a year that may see steady but slower growth rather than rapid expansion.
