Today, the Reserve Bank released the results of 46th round of its quarterly Services and Infrastructure Outlook Survey (SIOS) conducted during Q2:2025-26. This forward-looking survey¹ captures qualitative assessment and expectations of Indian companies engaged in the services and infrastructure sectors on a set of business parameters relating to demand conditions, price situation and other business conditions. In the latest round of the survey², 706 companies provided their assessment for Q2:2025-26 and expectations for Q3:2025-26 as well as outlook on key parameters for the subsequent two quarters.

Highlights:

A. Services Sector

Assessment for Q2:2025-26

• Services sector firms assessed an improvement in the overall business situation and their turnover during Q2:2025-26 (Chart 1 and Table A). Employment conditions remained positive with improved assessment on availability of finance during Q2:2025-26.

• Enterprises gauged higher pressures from input costs, however pressures from salary outgo and cost of finance moderated during the quarter.

• Firms’ sentiments on selling prices and profit margins strengthened in Q2:2025-26.

Expectations for Q3:2025-26

• Respondents were more upbeat regarding overall business situation, turnover, as well as both full-time and part-time employment during Q3:2025-26 (Chart 1 and Table A).

• Pressures from wage bill, finance cost and input cost are expected to rise in Q3:2025-26; however, expected rise in selling prices may help services firms to sustain their profit margins.

Expectations for Q4:2025-26 and Q1:2026-27

• Respondents remain optimistic about overall business conditions till Q1:2026-27 (Table C).

• Employment prospects are also expected to strengthen in the coming quarters.

• Input cost pressures are likely to persist, accompanied by further increases in selling prices.

• Responding services firms reported that with their existing resources they could provide 10.7 per cent additional services during Q4:2024-25 (Table S14).

B. Infrastructure Sector

Assessment for Q2:2025-26

• Infrastructure firms reported an improvement in demand conditions during Q2:2025-26 (Chart 2 and Table B).

• Enterprises experienced higher cost pressures stemming from input costs, cost of finance and salary outgo during Q2:2025-26.

• Infrastructure firms assessed higher growth in selling prices and profit margins.

Expectations for Q3:2025-26

• Respondents remained optimistic about overall business situation, turnover and employment in Q3:2025-26 though the expectations were somewhat moderated when compared with the previous survey round (Table B).

• Input cost pressures are expected to moderate during Q3:2025-26.

• Optimism regarding growth in selling prices and profit margins lowered as compared to the previous quarter.

Expectations for Q4:2025-26 and Q1:2026-27

• Respondents continue to remain positive on demand and employment conditions till Q1:2026-27 (Table D).

• Input cost pressures are likely to persist in near term, while growth in selling prices is expected to remain at an elevated level.

Summary of Net Responses³ on Survey Parameters

Note: Please see the excel file for time series data

Service Sector

Infrastructure Sector

¹ The survey results reflect the respondents’ views, which are not necessarily shared by the Reserve Bank.

² Results of the previous survey round were released on the Bank’s website on August 06, 2025.

³ Net Response (NR) is the difference between the percentage of respondents reporting optimism and those reporting pessimism. It ranges between -100 to 100. Positive value indicates expansion/optimism and negative value indicates contraction/pessimism. In other words, NR = (I – D); where, I is the percentage response of ‘Increase/optimism’, D is the percentage response of ‘Decrease/pessimism’ and E is the percentage response as ‘no change/ equal’ (i.e., I+D+E=100).  For example, increase in turnover is optimism whereas decrease in cost of inputs is optimism.