Services activity or PMI purchasing managers' index jumped in the month of July on the back of an increase in international demand. This has been the fastest surge in services activity in a year's time.
In July, Services PMI came in at 53.8, a massive jump in comparison to June's data of 49.6. A level above 50 mark separates expansion from contraction.
"India's service economy showed renewed vigor in July as businesses and households welcome the recent government budget announcement," Pollyanna De Lima, principal economist at IHS Markit, said.
"Encouragingly, service providers reported a widespread improvement in demand, from the public and private sectors as well as domestic and international markets."
A measure that tracks total demand reflected an increase in new order at is fastest pace in 3 years.
It is on the back of gains in business optimism which also led to an increase in hiring at its fastest pace since March 2011.