The seasonally adjusted HSBC India Services Purchasing Managers Index (PMI) Business Activity Index rose to 58.8 in April from 57.5 in March, as stronger domestic demand and higher e-commerce activity supported growth.
A shift from international to domestic suppliers amid the Middle East conflict also boosted transport services.
New orders increased at the fastest pace in five months. Firms reported gains from competitive pricing, rising e-commerce demand, and strong interest in relocation and logistics services.
Exports growth slowed to a five-month low, as the war in the Middle East and weak inbound tourism weighed on international demand. The New Export Business Index fell sharply and recorded the second-lowest reading in over a year.
Consumer Services led the expansion in output and new orders, followed by Transport and Information & Communication.
"Activity and new orders strengthened, even as new export orders eased, suggesting that demand is rotating from overseas markets to domestic consumers amid the Middle East conflict," Chief India Economist at HSBC, Pranjul Bhandari, said. "Input cost inflation moderated but remained elevated, while output price inflation stayed subdued, indicating that some firms are absorbing higher costs rather than passing them on."
The HSBC India Composite PMI Output Index, which covers both manufacturing and services, rose to 58.2 in April from 57.0 in March.