October 6, 2025 : India’s services sector showed strong performance in September, with the Purchasing Managers’ Index (PMI) rising to 60.9, according to the latest data from IHS Markit. This indicates robust expansion in the sector, which contributes significantly to the country’s economy.
What the Services PMI Means
The Services PMI is a monthly survey that reflects activity in India’s services sector, including IT, banking, hospitality, transport, and professional services.
- A PMI above 50 indicates growth, while below 50 signals contraction.
- At 60.9, the September reading suggests strong expansion and healthy business activity.
- Growth was driven by increased new orders, higher business optimism, and expansion of workforce in many service industries.
Factors Driving Growth
Analysts attribute the rise in services PMI to several factors:
- Domestic Demand: Recovery in consumer spending and business activity.
- Exports: IT and software services continued to attract international clients.
- Digital Transformation: Companies investing in technology and innovation to expand services.
- Favorable Economic Policies: Government incentives and business-friendly measures supporting service providers.
Impact on the Economy
India’s services sector contributes around 55–60% of the GDP, making this strong PMI reading significant for overall economic growth.
- Employment: Job creation in IT, finance, and professional services is expected to increase.
- Business Confidence: High PMI suggests optimism among companies about future growth.
- Investment: Encourages both domestic and foreign investments in service-based industries.
Economists say sustained growth in services can offset slower industrial growth, supporting the country’s GDP expansion.
Expert Commentary
Ramesh Menon, Chief Economist at India Ratings, said:
“A services PMI of 60.9 is impressive. It reflects strong domestic and export demand, and indicates businesses are confident about growth prospects for the next quarter.”
He added that while services are thriving, manufacturing and infrastructure sectors need similar momentum to maintain balanced growth.
Sector-Wise Observations
- IT & Software Services: Continued international client demand pushed new orders higher.
- Banking & Finance: Increased lending and transaction volumes contributed to growth.
- Hospitality & Tourism: Moderate improvement as travel demand picked up post-pandemic.
- Transport & Logistics: Expansion due to higher freight movement and e-commerce demand.
The overall sentiment in the service sector is optimistic, with many businesses planning further expansion and hiring.
Global Comparison
India’s services PMI of 60.9 is among the highest in Asia, indicating a stronger expansion rate than many other major economies, reflecting resilience despite global economic challenges.
Economists point out that international demand for Indian IT and professional services is a major driver of this performance.
Looking Ahead
- Experts expect services sector growth to continue in the coming months if domestic consumption remains strong.
- The government may further support the sector with digital infrastructure improvements and business incentives.
- Investment in skills and technology will be critical to sustain high productivity and service quality.
Conclusion
India’s services PMI rising to 60.9 in September signals robust growth and optimism in one of the country’s key economic sectors. Strong demand, business confidence, and investment in digital capabilities are likely to drive continued expansion, positively influencing the broader economy.
Summary
India’s services PMI rose to 60.9 in September, showing strong growth across IT, finance, and hospitality sectors. Optimism and increased demand signal positive economic momentum ..