India’s services sector growth decelerated to its lowest point in five months in October due to increased competitive pressures and adverse weather conditions, according to the latest PMI data. Heavy monsoon rains and sustained competition were key factors contributing to the slowdown, posing challenges for the sector’s expansion.
India’s services sector growth slows to five-month low in October 2025 due to competitive pressures and heavy rains, according to PMI data.
India’s services sector experienced a notable slowdown in growth in October 2025, reaching its lowest level in five months, as competitive pressures intensified and heavy monsoon rains disrupted operations, according to the latest Purchasing Managers’ Index (PMI) data released on November 6. The sector, a significant contributor to India’s GDP and employment, showed weaker expansion amid challenging market conditions and environmental factors. The IHS Markit India Services Business Activity Index fell to 56.2 in October from 58.0 in September, marking the slowest increase since May. While a reading above 50 still indicates expansion, the decline points toward moderated growth in activity across the service industries. Analysts attributed the deceleration primarily to heightened competition, which pressured new business volumes and constrained pricing power. “Competitive intensity in the market led many service providers to reduce prices to maintain customer engagement, impacting revenue growth,” noted a senior economist at IHS Markit. In addition to market competition, persistent and heavy monsoon rains disrupted supply chains and limited workforce mobility, particularly affecting segments reliant on physical presence such as retail and hospitality. Service providers reported delays and cancellations, which contributed to slower output growth during the month. The subdued new work inflows were reflected in the business new orders component of the PMI, which rose at its slowest pace in six months. Despite this, companies remained optimistic about future activity, although expectations were somewhat tempered by concerns over uncertain economic conditions and geopolitical developments. Employment in the sector continued to grow at a moderate rate, driven by sustained demand in certain sub-sectors such as IT services and financial services. Input cost inflation showed signs of easing, owing partly to competitive pricing and improved supply chain availability, which helped some firms to expand their margins. The Indian services sector has been a critical engine of economic growth, representing over 50% of GDP and employment. However, the October PMI data suggest that the sector is currently navigating through challenges posed by intensified competition and adverse weather, which may have broader implications for economic momentum in the coming months. Experts suggest that addressing structural issues and enhancing resilience against climatic disruptions will be essential for sustaining robust expansion in India’s services industries. In summary, India’s services sector growth slowed to a five-month low in October 2025 amid competitive market pressures and the impact of heavy monsoon rains, as indicated by PMI data, signaling a cautious outlook for the sector’s near-term performance.
