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India's services sector is expected to maintain a positive demand outlook in Q3FY27, although business optimism has moderated compared with the previous quarter, with firms anticipating some easing in cost pressures but remaining less optimistic about selling prices and profit margins, according to the Reserve Bank of India's (RBI) latest Services and Infrastructure Outlook Survey.
The apex bank noted, during Q2FY27, services sector companies reported an improvement in overall business conditions, turnover and full-time employment. However, Firms reported increased cost pressures with some increase in selling prices, although profit margin sentiment remained subdued, it said. In its survey, the central bank further highlighted that services sector firms remained optimistic about demand conditions in Q3FY27, although their level of optimism moderated compared with the previous quarter. At the same time, firms expected cost pressures to ease moderately but expressed relatively lower optimism about selling prices and profit margins. Cost pressures are expected to ease moderately, it said, noting, Firms expressed relatively lower optimism regarding selling prices and profit margins. For Q42026-27 and Q12027-28, it said, Respondents outlook remains optimistic till Q1:2027-28, adding, Input cost pressures are likely to sustain with expectations on selling prices to remain stable in the ensuing quarters. Additionally, services sector firms indicated that they had the capacity to deliver 8.7 per cent more services during Q1FY27 using their existing resources, RBI noted. RBI also surveyed infrastructure companies and noted that firms remained optimistic about overall business conditions, employment and turnover during Q2FY27. At the same time, companies reported some easing in cost pressures, although sentiment regarding selling prices and profit margins moderated. Looking ahead to Q3FY27, infrastructure firms continued to express confidence in overall business conditions and turnover, but their expectations for selling prices and profit margins weakened. For Q4FY27 and Q1FY28, infrastructure companies remained optimistic about business conditions and turnover. Infrastructure firms remain optimistic on overall business situation and their own turnover; they also expect rise in input costs with concomitant rise in selling prices, the survey said. (ANI)
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