There was a significant rise in India's service sector during April 2026. Domestic demand, new orders, and improved business activity contributed to making this sector achieve its highest position in five months. The PMI for India's service sector rose to 58.8 in April from 57.5 in March, according to HSBC survey results.

A PMI reading above 50 indicates expansion in economic activity, while a reading below 50 indicates contraction. In such a scenario, a score of 58.8 indicates that the country's services sector is growing at a strong pace.

According to the survey, competitive pricing, e-commerce activity, and growing demand for logistics and relocation services boosted business. Companies reported continued strong domestic demand, boosting both new orders and output.

Pranjul Bhandari, Chief India Economist at HSBC, said that amid the ongoing conflict in West Asia, demand in the Indian economy appears to be shifting from foreign markets to domestic consumers. He said that service sector activity saw a significant improvement in April, although the pace of new export orders slowed.

The report stated that the war in West Asia and the low influx of foreign tourists weakened international demand for Indian services. This impacted the expansion of export-oriented services.

At the same time, corporate costs also continued to rise. Operating expenses remained high due to increases in edible oil, eggs, meat, vegetables, gas, and labor costs. Some companies also cited gas shortages. However, they did not pass on the full burden of increased costs to customers, resulting in service charge inflation falling to a three-month low.

Pranjul Bhandari said that while input costs have softened somewhat, they remain high. Meanwhile, limited output price inflation indicates that many companies are absorbing the additional costs themselves.

Positive signs have also been seen on the employment front. Companies hired more employees at the beginning of the first quarter of the fiscal year. According to companies, the increase in new business led to increased hiring of temporary workers and junior-level trainees.

Meanwhile, the HSBC India Composite PMI Output Index, compiled by S&P, rose to 58.2 in April from 57.0 in March. While this growth is considered strong, its pace was relatively slow compared to the previous two and a half years.

According to the report, Indian services sector companies remain optimistic about the coming 12 months and expect business growth. However, business confidence has declined slightly compared to March due to concerns about the Middle East crisis and rising costs.