India’s Services Sector Growth Eases in September 2025

India’s services sector witnessed a slowdown in growth during September 2025, as softer improvement in demand and rising input costs curtailed output expansion. According to the latest Services Purchasing Managers’ Index (PMI) report, the sector’s growth moderated, reflecting a cautious business environment amid inflationary pressures.

Services PMI Signals Continued Expansion

Despite the moderation, the September Services PMI index remained comfortably above the neutral 50.0 threshold, indicating that output continued to expand, albeit at a slower pace compared to previous months. The index suggests that service providers are experiencing growth, though momentum has eased due to factors such as softer client demand and higher operational costs.

Factors Behind Slower Growth

1. Moderation in Demand: Businesses reported a slight slowdown in new orders and client activity, leading to restrained output growth.

2. Inflationary Pressures: Rising input costs and wage pressures contributed to reduced profit margins and cautious expansion strategies.

3. External Uncertainties: Global economic fluctuations and trade volatility also influenced service providers’ confidence in near-term investment.

Sector Performance

Key segments within the services sector, including IT services, financial services, and professional services, showed steady growth but at a softer pace. Analysts note that domestic consumption and corporate spending remained resilient, supporting the overall expansion, even as some discretionary service demand softened.

Expert Analysis

Industry experts emphasize that the moderation in growth is not alarming, as the PMI index indicates continued expansion. The services sector, which contributes significantly to India’s GDP, is expected to maintain steady performance, provided that demand conditions stabilize and inflationary pressures are managed.

Implications for the Economy

• Slower services growth may slightly temper overall GDP growth projections for the quarter.

• Businesses may adopt cautious hiring and investment strategies in response to moderated demand.

• Policy measures to control inflation and stimulate domestic consumption could support sustained growth in the sector.

Conclusion

India’s services sector growth eased in September 2025 as softer demand and rising costs constrained output. However, the PMI index remaining above 50 highlights continued expansion, signaling that the sector remains resilient. Analysts expect that with stabilized demand and controlled inflation, the services sector will continue to be a key driver of India’s economic growth in the coming months, maintaining a balance between expansion and sustainability.

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