India Services Sector Expands as Trade Surplus Narrows

India's services sector experienced broad-based expansion in July 2026, with 17 of 19 sub-sectors recording year-on-year growth. According to trial Index of Services Production data released by the Ministry of Statistics and Programme Implementation, ten segments achieved double-digit growth. Administrative and support services led the expansion at 20.9%, followed by retail trade at 18.5% and real estate at 14.4%. Other strong performers included banking, wholesale trade, and accommodation and food services.

Two sectors faced declines, with repair services contracting by 5% and air transport falling by 8.4%. The decline in air transport marks a fourth consecutive month of contraction, a trend attributed to airspace closures, rerouted flights, and higher fuel prices resulting from the war in West Asia.

Recent trade data from the Reserve Bank of India indicates that services exports grew 13.7% year-on-year in August 2026, reaching USD 35.47 billion. However, services imports grew faster at 21.4%, totaling USD 18.93 billion. While India maintained a services trade surplus of approximately USD 16.54 billion, this represents a decrease from the USD 17.65 billion surplus recorded in July. Both exports and imports declined on a month-on-month basis from July levels.