Services Sector Activity Index
Services Sector Activity Index
Current Phase
Transitory Slowdown
Index Value: 52.51
Summary
A transitory slowdown signifies a phase where the services sector performs poorer than the previous quarters, which is marked by declining confidence among consumers and businesses, and reduced trade and investment.
Index Value (LHS)
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Current Phase
Transitory Slowdown
Index Value: 52.51
Summary
A transitory slowdown signifies a phase where the services sector performs poorer than the previous quarters, which is marked by declining confidence among consumers and businesses, and reduced trade and investment.
Services Sector Activity Index
Showing: Index Value • Range: 10 Years
Index Value (LHS)
Overview
Recent Updates
- HSBC Services PMI eased to 57.5 in March 2026 (from 58.1 in February), the softest expansion in 14 months due to weaker domestic new business but robust export orders.
- Input costs accelerated to fastest since 2022 (fuel, logistics from Middle East war), yet employment hit strongest since mid-2025.
- Services input costs rose on higher prices for chicken, cooking oil, eggs, electricity, fish, fruit, fuel, labor, meat, and vegetables, pressuring margins.
- March 2026 gross GST collections reached Rs 2,00,064 crore, reflecting an 8.8% year-on-year (YoY) growth, with full-year FY26 gross GST at Rs 22.27 lakh crore.
Near-term Outlook
- The Services Sector Activity Index is expected to indicate continued strong expansion through 2026, supported by urban consumption, formalisation, digital adoption, and strong domestic demand.
- India’s IT and business services ecosystem continues to expand, supported by strong global outsourcing demand and a large skilled workforce, positioning the sector for sustained medium-term growth.
- Overall, the index points to steady services-led growth with stable employment, strong consumption linkages, and continued formalisation, making the services sector a key stabiliser for India’s growth amid global uncertainty.
Description
What is the Services Sector Activity Index?
Services Sector Activity Index is crafted using various high frequency economic indicators which captures the demand and supply side fluctuations, seasonal variations, impact of domestic policy measures, tax reforms, employment situations and global developments, to provide a timely insight into the performance of the services sector in India. Services sector is a crucial indicator for policymakers to formulate effective economic and trade policies; and also, to track the demand sentiments in the economy.
What are its components?
The index covers diverse economic parameters covering both demand and supply side factors. We have assigned appropriate weights to each of these indicators, which reflect the impact of these factors on the services sector activities.
The High Frequency Indicators (HFIs) include:
Assessment and Expectation for Overall Business Situation (Services, Quarterly Survey)
Baltic Dry Index (BDI)
Non-food Bank credit of SCBs: Services Sector
Capital Expenditure - Central Government
Central Government Tax Collections (gross)
Consumer Price Index (CPI) Inflation - Miscellaneous
Domestic Air Passenger Traffic
Domestic Passenger Car Sales
Usability
How to use Services Sector Activity index for better financial decision-making?
Insights from the services sector, a major component of India’s GDP, offer a strategy that is both informed and responsive to the dynamic nature of the Indian economy, especially within the vital services sector. These insights ensure that financial planning is robust, adaptive, and ready to seize emerging opportunities.
Insights
Performance Analysis of Services Sub-sectors: Identifying trends in sub-sectors such as hospitality, IT, or financial services is key in forecasting market conditions, indicating potentially favourable times to invest in these areas.
Demand Forecasting in Services: Indicators such as domestic air traffic and rail freight traffic shed light on mobility on demand within the services sector, aiding in the adjustment of spending and savings strategies, particularly during economic downturns.
Job Market Stability in Services Sector: Observing trends in the services sector provides a predictive view of employment stability, crucial for planning financial security and emergency savings for those employed in the sector.
Policy Changes and Tax Reforms Impact: Monitoring shifts in policy and tax reforms related to the services sector is essential. Understanding these changes helps in strategically adjusting investment plans to either mitigate risks or leverage new opportunities that arise from these economic policy shifts.
Historical Events
Apr
2025
Rise of Protectionism around the World: US and EU Elections
The EU and the US are India’s largest trading partners and a key source of FDI and Exports. Donald Trump’s victory in the 2024 elections and his subsequent announcement of reciprocal tariffs on trading partners reignited the concerns around protectionist policies as a means. European Parliament (EP) is the EU’s directly elected legislative body, with 720 members (MEPs) representing 27 member states. Elections occur every five years.
Feb
2022
Russia-Ukraine War
The Russia-Ukraine War, with Russia’s military intervention in Ukraine on February 24, 2022, was a major geopolitical conflict that has caused widespread international concern and economic repercussions. It marks a severe intensification of the long-standing tensions between Russia and Ukraine.
Mar
2020
COVID-19 Pandemic and Lockdown
The COVID-19 pandemic, a global health crisis caused by the novel coronavirus, began affecting India significantly from March 2020. Characterised by widespread infections, lockdowns, and public health emergencies, the pandemic has had profound implications on the Indian economy and society. According to the Ministry of Health and Family Welfare (MoHFW), COVID-19 caused 5,33,318 deaths as of December 19, 2023.
Jul
2017
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Implementation of GST
On July 1, 2017, India underwent a major tax reform with the implementation of the Goods and Services Tax (GST), marking a significant milestone in the country's taxation history. GST was introduced as a comprehensive indirect tax on the manufacture, sale, and consumption of goods and services throughout India, replacing multiple cascading taxes levied by the central and state governments.
Nov
2016
Demonetisation
Demonetisation, announced on November 8, 2016, was a significant decision by the Indian government to withdraw the legal tender character of the Specified Bank Notes (SBNs), involving the high-value currency notes (₹ 500 and ₹ 1,000) from circulation. It represented a drastic step by the government in its fight to curb black money, counterfeit currency and corruption.