The headline seasonally adjusted Nikkei India Composite PMI Output Index, that maps both the manufacturing and services sectors, rose from 53.3 in June to 54.1 in July.
On the job front, Indian service providers continued to add to their payrolls and the sector witnessed the second-strongest increase in employment since March 2011.
However, predictions that economic conditions will normalise after the elections underpinned optimism regarding the outlook and supported a stronger upturn in employment.
The seasonally adjusted Nikkei India Services Business Activity Index fell to 50.2 in May, from 51.0 in April, pointing to the slowest growth rate in the current 12-month stretch of expansion.
A reading above 50 represents expansion while one below means contraction.
A reading above 50 indicates expansion while a one below this level means contraction.
The Nikkei India Services Purchasing Managers' Index (PMI), which tracks services sector firms on a monthly basis, stood at 48.7 in January, as against 46.8 in December 2016.
Business confidence remained positive in August and was driven by upbeat forecasts of sales, an expected improvement in demand and promotional activities
The survey noted that advertising campaigns supported the increase in new work growth in the sector amid competitive pressures.
Service providers' confidence with regard to the 12-month outlook for business activity remained positive.
While manufacturing firms cut jobs for the first time in 20 months to sharply reduce costs, services providers continued their hiring spree.
The services sector had slipped into contraction in July as confusion caused by the GST rollout triggered a dip in new business orders.
The Nikkei India Services PMI posted above the critical 50.0 level, which separates growth from contraction, for the fourth month running in May.
The improvement in business conditions promoted job creation, while confidence towards the year-ahead outlook for activity was at a four-month high during March.
With factory production, activities across the private sector saw the biggest drop in over three years
Currency scarcity weighed on manufacturing performance where growth of new work flows slowed
A reading below 50 means contraction in the sector.
A reading below 50 means contraction in the sector.
The Nikkei India Services Purchasing Managers' Index, which tracks services sector companies on a monthly basis, stood at 52 in September, down from August's 43-month high of 54.7, pointing to a slower and moderate rate of expansion.
Manufacturing production growth eased in May, which combined with the slowdown in services resulted in a weaker increase in private sector output, the survey said.
On the employment front, services employment was unchanged in April.
The Nikkei India Services Purchasing Managers' Index, which tracks the services sector firms on a monthly basis, stood at 50.3 in February, up from 48.7 registered in January.
A reading above 50 means the sector is expanding, while a reading below 50 means contraction.
The index went below the crucial 50 mark.
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