India’s services sector expands 3% as PMI climbs to 55.2 in September

NEW DELHI — India’s services sector expanded 3.0% year‑on‑year in the September quarter, according to the latest Purchasing Managers’ Index (PMI) survey released on 6 October 2026. The index rose to 55.2, the highest reading in three months, while the quarterly growth rate marked the weakest pace since the 2022 fiscal year.

PMI shows mixed signals

The Services PMI, compiled by S&P Global, stayed above the 50‑point expansion threshold for the 31st consecutive month. A reading of 55.2 indicates that new orders, output and employment expectations improved relative to the previous month. However, the survey also noted a slowdown in the rate of growth compared with the previous quarter, a trend that analysts link to weaker export demand and tighter credit conditions.

Domestic demand underpins the rebound

Survey data point to stronger activity in consumer‑oriented services such as retail, hospitality and transport, which offset slower momentum in business‑to‑business segments. The BusinessLine report highlighted that domestic demand “strengthened” in September, helping lift the overall index. Financial services and information‑technology (IT) also posted solid performance, with IT firms reporting higher order books despite global uncertainty.

Quarterly growth slows after 2022 peak

While the 3% expansion beats the 2.4% growth recorded in the previous quarter, it remains the lowest quarterly increase since the 2022 fiscal year, when the sector grew 4.1%. The Economic Times analysis attributes the deceleration to a combination of subdued export orders and a cautious outlook among corporate buyers.

Global factors weigh on outlook

International market volatility, particularly in Europe and North America, has tempered expectations for overseas contracts. BoldNewsOnline noted that “global uncertainty” is likely to keep export‑linked services growth modest through the remainder of the year.

Policy context

The Ministry of Commerce and Industry has reiterated its focus on boosting service exports through incentives for technology‑driven firms. In a recent press release, the ministry said it would expand credit lines for small and medium‑sized service exporters, aiming to offset the slowdown in foreign demand.

Looking ahead

Analysts expect the services PMI to remain above the expansion line for the next two months, provided domestic consumption stays resilient. However, they caution that any further deterioration in global trade conditions could drag quarterly growth lower.