India's Services Sector Hits 10-Month Low, Struggling Amidst Fierce Competition

India's services sector activity plummeted to a 10-month low in September, as recorded in the HSBC India Services Business Activity Index. Increased competition, input cost pressures, and changing consumer preferences contributed to the slowest growth phase, despite ongoing job creation and international gains.

India's services sector experienced a notable decline in September, marking a 10-month low, according to a monthly survey released Friday. The HSBC India Services Business Activity Index, a key indicator of the sector's health, dropped from 60.9 in August to 57.7 in September, reflecting a decreased growth pace since November 2023.

The contraction in new businesses, international sales, and output growth was influenced by heightened competition, rising costs, and a shift in consumer preferences toward online services. A slower increase in new export orders also contributed to this downturn, despite gains from regions such as Asia, Europe, and North America.

Despite these challenges, the data revealed solid job creation and increased business optimism. While service companies faced margin pressures due to a slower rise in prices, private sector employment picked up and business confidence continued to rise since August, the survey noted.

(With inputs from agencies.)