The seasonally adjusted Nikkei India Composite PMI Output Index fell from 52.6 in August to 51.5, highlighting the weakest rate of expansion in the current period of growth. The slowdown reflected weaker increases in both manufacturing and services output.

"Down from 51.8 in August to 51.3 in September, the seasonally adjusted Nikkei Business Activity Index pointed to a slight and softer expansion of services output across the country. Whereas higher new business was reported to have led activity to increase, there were mentions that tough economic conditions weighed on growth," a release by the Markit on behalf of Nikkei India PMI showed.

New order growth in the goods producing sector also softened and was the weakest since June.

Commenting on the Indian Services PMI survey data, Pollyanna De Lima, economist at Markit, which compiles the survey, said: "India's economy lost steam in September, with growth fading across both the manufacturing and service sectors.

The sluggish increase in private sector output mirrored softer demand conditions across the country, while growth of global demand for Indian goods also moderated.

"Vital to the resilience of India's economy, price pressures dissipated in September. Lower commodity prices coupled with falling petrol costs resulted in an overall drop in average input prices. On the back of this, businesses lowered their tariffs."

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