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Key takeaways

  • The financial and insurance sectors are driving strong growth in India's services sector.
  • Consumer services contribute significantly to this growth, with the highest optimism among consumer services providers.
  • Union Bank of India reported credit growth of 8.6 percent and J&K Bank and Ujjivan Small Finance Bank showed impressive growth in advances and deposits.

India's service sector showed strong growth in March, driven mainly by the financial and insurance sectors. S&P Global's report indicated this resilience despite a slight decline in the Purchasing Managers' Index (PMI) to 58.5 compared to 59.0 in February.

Consumer services also contributed significantly to this growth. Inflation declined to its lowest point in five months due to reduced cost pressures and intense competition within the sector. However, service managers remain cautiously optimistic about the year ahead as they anticipate continued competitive challenges. Optimism is highest among consumer service providers, surpassing that of the financial, insurance and real estate sectors.

Strong economic momentum

This robust growth in the services sector propelled the Indian composite PMI to its highest point in seven months, indicating strong economic momentum in both manufacturing and services. The trend is consistent with a global pattern where service sectors are growing even amid competitive pressures. With inflation expected to stabilize, India is well positioned for sustained economic growth.

Banking sector drives growth

Strong financial performance in the banking sector reinforces this positive outlook. Union Bank of India reported credit growth of 8.6 percent to 9.82 trillion rupees (about 109 billion euros) for the March 2025 quarter, in addition to a steady increase in total advances and deposits. J&K Bank and Ujjivan Small Finance Bank also showed impressive growth in their respective advances and deposits during the same period.

These results underscore the strength and stability of financial institutions in India. The combined growth in the services and banking sectors indicates a resilient economy capable of meeting competitive challenges and coping with global uncertainties.

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