India’s services activity accelerated in April, recording the strongest expansion in five months, driven by robust domestic demand, a surge in e-commerce, and greater reliance on local suppliers amid global supply chain challenges caused by the conflict in Middle East, S&P Global said on Wednesday. The HSBC India Services Purchasing Managers’ Index (PMI) climbed to 58.8 in April from 57.5 in March. A PMI above the 50-mark signals month-on-month growth in the sector.

“Consumer Services led April’s expansion in new orders and output, followed by Transport, Information & Communication,” the report noted.

While domestic momentum strengthened, international demand for Indian services showed signs of softening. Geopolitical tensions and weaker inbound tourism further limited the pace of expansion, S&P Global noted. The seasonally adjusted New Export Business Index fell by more than five points and reached its second-lowest print in over a year (surpassing November 2025), the report said.

Rise in operating expenses

According to the S&P Global, services firms faced another notable rise in operating expenses, though the rate of input cost inflation eased slightly from recent peaks. Still, cost pressures remained among the highest in roughly 18 months.

“Input cost inflation moderated but remained elevated, while output price inflation stayed subdued, indicating that some firms are absorbing higher costs rather than passing them on,” said Pranjul Bhandari, Chief India Economist at HSBC.

Businesses reported improved sales supported by competitive pricing strategies, buoyant e-commerce activity, and strong client demand in relocation and logistics services.

Looking ahead, services companies maintained a positive outlook for output growth over the next 12 months, citing expected demand increases, marketing efforts, and rising client inquiries. However, ongoing cost pressures linked to the West Asia conflict tempered business sentiment compared to March.

In response to rising workloads, firms continued to expand their workforce, particularly by hiring short-term staff and junior trainees. This sustained recruitment helped companies reduce outstanding business for the first time in four months, although the decline in backlogs was only modest.

The broader composite PMI, which combines services and manufacturing, rose to 58.2 in April from 57.0 in March, still among the weaker readings of the past two-and-a-half years but closely aligned with the flash estimate of 58.3. Overall, India’s private sector output expanded at a faster clip last month as both manufacturing and services regained momentum lost in March.