PMI: India's services exports bump may lose steam amid global economic gloom
Business momentum in India's services sector was steady in May. The seasonally adjusted HSBC India Services PMI Business Activity Index rose to 58.8 last month from 58.7 in April. A reading above 50 indicates expansion.
The key highlight of the survey was the solid growth in exports of services. The New Exports Orders sub-index rose to 57.6 in May from 55.4 in April. Survey participants reported one of the strongest improvements in international demand in 19-and-a-half years of data collection.
Also Read | India services activity hits three-month high in May on strong export growth; employment rises by record
For manufacturers as well, new export orders rose in May at one of the strongest rates recorded in three years. Panel members remarked on favourable demand from Asia, Europe, the Middle East and the US. But here's a catch.
'In H1 2025, Asian economies have been whipsawed by Trump tariffs; growth and inflation have moderated, even as export frontloading has provided some offset," Nomura Global Markets Research said in a report dated 2 June.
According to Nomura, disinflationary forces are likely to permeate across Asia, and, unlike past export downturns, this is likely to be compounded by Asian currency strength against the US dollar. Thus, Asian central banks will likely continue to decouple from the US Federal Reserve and deliver more policy easing.
In its meeting this week, the Reserve Bank of India is widely expected to cut repo rates by another 25 basis points (bps) to 5.75%. So far, the central bank has cut rates by 50 bps to boost growth amid easing inflation.
Relatively immune
The Indian economy is more domestically driven, with consumption seen as the mainstay for growth. This makes India relatively immune to global trade shocks than Asian peers, but the problem is that consumption demand, especially urban, has been languishing lately.
Companies are struggling with subdued revenue and profit growth, household incomes are muted and latest high-frequency data such as automobile sales is uninspiring.
Also Read | India's exports face geopolitical woes but trade deals offer relief: RBI report
Meanwhile, business confidence of Indian service providers measured via the Future Output Index recovered to 60.4 in May from April's 23-month low of 59.7. Expanded workforces, larger client bases and ongoing marketing initiatives make service providers hopeful.
According to Gaura Sengupta, economist at IDFC First Bank, India's services export growth outperformed merchandise export growth in FY25 also, growing in double-digits. While this outperformance is likely to continue in FY26, she said some moderation in services export growth is likely with the US economy expected to slow down. That said, the manufacturing sector will be impacted more by the tariff tensions and the global growth slowdown.
Also Read | Services boost India's exports to an all-time high of $824.9 billion in FY25
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Time of India
38 minutes ago
- Time of India
S Jaishankar welcomes Belgium's support and solidarity in combatting terrorism
BRUSSELS: External affairs minister began his visit to Belgium on Monday with a meeting with deputy prime minister and foreign minister Maxime Prevot. The discussions focused on enhancing bilateral cooperation and combating terrorism. Tired of too many ads? go ad free now He appreciated Belgium's support in combating terrorism and welcomed their solidarity and emphasised the strong momentum in the India-EU partnership, highlighting the potential for collaboration in clean energy, mobility, and pharmaceuticals. The two leaders discussed deepening cooperation in areas such as trade, investment, technology, defense, and security. Sharing the details in a post on X on Monday, EAM said, "Pleased to meet DPM & FM @prevotmaxime at the start of my visit to Belgium. Welcomed Belgium's support and solidarity in combatting terrorism. Appreciated the strong momentum of our bilateral engagement and the India - EU partnership. Also held wide - ranging discussions on deepening our cooperation including in trade, investment, technology, defence & security, pharmaceuticals, clean energy and mobility. " Jaishankar's visit to Brussels comes three months after Princess Astrid of Belgium led a 300-member economic mission to India. The recent visit by Princess Astrid, who met with Prime Minister Narendra Modi and Jaishankar, discussed key areas such as labor migration, pharmaceuticals, defense, diamonds, space exploration, and green energy. Interestingly, Jaishankar's visit coincides with the detention of fugitive Indian diamantaire Mehul Choksi in a Belgian jail. Choksi, accused of defrauding Punjab National Bank of Rs 13,850 crore, was arrested in mid-April on India's extradition request. Tired of too many ads? go ad free now India has an extradition treaty with Belgium, and the government is likely to pursue Choksi's extradition during the EAM's visit. Jaishankar is on an official visit to France, the European Union (EU), and Belgium from June 8 to 14, 2025, the Ministry of External Affairs announced in a press release on Sunday. The visit marks a significant step in further strengthening India's strategic partnerships with Europe. The EAM will first travel to Paris and Marseille, France, where he will hold bilateral discussions with the Minister for Europe and Foreign Affairs of France, Jean Noel Barrot. The EAM will hold a Strategic Dialogue with the EU High Representative and Vice President Kaja Kallas. According to the MEA press release, "India-European Union strategic partnership has strengthened over the years across diverse sectors and got a big boost with the first-ever visit of the EU College of Commissioners to India in February this year." Jaishankar will also meet senior leadership from the European Commission and European Parliament and interact with think tanks and media. MEA in its statement noted that the Belgium leg would also see the EAM meet members of the Indian community during his visit. The MEA highlighted, "India and Belgium share warm and friendly relations along with a very robust economic partnership. Today the collaboration between the two countries spans various domains like trade and investment, green energy, technology, pharmaceutical, diamond sector and strong people-to-people ties." The Ministry of External Affairs emphasized that the visit is expected to further deepen India's friendly relations with the European Union, France and Belgium and give renewed momentum to ongoing cooperation in diverse areas.
India Today
an hour ago
- India Today
Trump says he won't scrap Starlink, wishes Musk well despite tensions
US President Donald Trump on Monday said he has no plans to terminate the government's use of Elon Musk's Starlink satellite service, calling it "a good service".Speaking to reporters aboard Air Force One, Trump confirmed his administration has no immediate intention to review or cancel the satellite contracts with Musk's SpaceX, even as speculation swirled about a cooling relationship between the two high-profile would not drop Starlink. It's a good service," Trump said, brushing off concerns raised by critics about the scope and influence of Musk's government-linked ventures. When asked about his current relationship with Musk, Trump said, "I wish Musk well."When pressed on whether he would consider speaking to Musk directly, Trump remarked, "I would imagine Musk would want to talk to me," before adding, "I haven't thought about speaking to him."He also dismissed recent media chatter about Musk allegedly using drugs during a prior visit to the White House, "I don't know if Musk had drugs at the White House,' Trump said. 'That's not something I was ever told. I don't know anything about that."MUSK BACKS TRUMP DESPITE RECENT FALLOUTThis comes as an unexpected move amid their ongoing public spat. Elon Musk on Monday endorsed a social media post by US President Donald Trump regarding the ongoing protests in Los Angeles over immigration raids. The endorsement came just days after a fallout between the two over the US tariff the post, Trump called for an apology from California Governor Gavin Newsom and Los Angeles Mayor Karen Bass, blaming them for the recent violence sparked by protests against his administration's sweeping crackdown on undocumented locked horns with the US President through a series of tweets and even claimed that Trump has been named in Jeffrey Epstein files (though he later deleted the post).With inputs from Reuters Must Watch
Time of India
an hour ago
- Time of India
India's trade agreement with EFTA to boost investments by $100 billion
Live Events (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel Bern, Switzerland: India's trade agreement with the European Free Trade Association (EFTA) comprising Switzerland, Norway, Iceland and Liechtenstein will come into effect in September, commerce and industry minister Piyush Goyal said on also said talks on a trade deal with the European Union could be concluded 'faster than expected'.India had already created a dedicated desk under Invest India for companies from the EFTA bloc to facilitate investment in India, he said, adding: "It will enter into force by September."The agreement has received approval from the parliaments of all four countries, Goyal said. In Switzerland, there is an objection period open until July 10 when citizens could challenge the pact. July and August are holiday months Delhi and the EFTA nations had signed the Trade and Economic Partnership Agreement (TEPA) on March 10, agreement envisages an investment commitment of $100 billion in 15 years from the grouping into India in lieu of customs duty cuts. This commitment, Goyal said, was included for the first time in a trade who is on a four-day visit to Switzerland and Sweden, said companies in biotech, cybersecurity, healthcare and machinery manufacturing have shown interest in investing in India. A delegation of 90 Indian companies is accompanying Goyal on this visit to meet local leaders and businesses to promote trade and said he held bilateral meetings with over a dozen companies here and most of them are keen to invest in India. He said a delegation of 100 companies had visited India in February and some of them are keen to test market their products"There is a lot of excitement here for India," he said, adding that the trade deal will bring predictability, continuity and stability of the policy regime for investors from both was talking to journalists after his meeting with Swiss industry Minister Narendra Modi's government, which has completed 11 years, has gone from a position of strength to negotiate free trade deals with advanced economies, Goyal Delhi is in talks with the US for a bilateral trade deal, he said. India has already signed an early harvest deal with Australia and is also actively negotiating agreements with New Zealand, Chile, Peru and trade dealAsked about if India is prepared to finalise a trade agreement with the US by prioritising low-hanging fruits, Goyal said: "India is always ready for that and I believe that" the things, which are not controversial, the low-hanging fruits, should be captured first as those sectors will start getting is not necessary to wait for everything and why waste time until it is perfect, he said, citing the example of trade officials are in New Delhi for the trade talks with their Indian counterparts. The week-long deliberations will conclude on June whether the deal can be concluded before July 9, he said: "I am a born optimist".During his meeting with companies here, Goyal suggested they organise board meetings in India so that they can see the investment potential in the country."The world today recognises that the best place to do business is India … India is also a preferred destination for services," he years of governmentTalking about the 11 years of the Modi government, Goyal said close to 2,000 GCC (global capability centres) had been set up in the are all possible because of "good governance" of the last 11 years, he said, while highlighting the reduction in extreme poverty and performance of stock markets. He also cited the gap between the yields on Indian bonds and the US treasury, which has narrowed from 6.3% in 2014 to 1.78% now.'PM Modi had taken the country from being a fragile five to being among the top five economies,' he saidGoyal said the government is trying to create large domestic accountancy firms in India, and the country will soon have its own "Big Four".Global professional services firms Deloitte, PricewaterhouseCoopers, EY and KPMG currently dominate the accountancy space in the country.
