On Monday, another Nikkei survey had said India's manufacturing growth had cooled to a 22-month low in October.
"Services companies saw a faster rise in new business than their manufacturing counterparts," said Pollyanna De Lima, economist at Markit, which compiled the survey. The improvement in activity became visible as companies cut prices in October. This was the second month in a row that companies had to resort to discounting to get new business.
A sub-index measuring prices was 49.6, only marginally higher than the previous month's 49.5. A reading above 50 indicates expansion and one below it shows contraction.
The seasonally adjusted Nikkei India Composite PMI Output index, which maps both manufacturing and services sectors, rose to 52.6 in October from 51.5 in September, helped by new business.
Business sentiment in the services sector also remained positive regarding the 12-month business outlook.
Not with standing the growth in services activity, the October data indicated that employment in the sector was unchanged. Around 98 per cent of respondents reported no change in payroll numbers since the preceding month. This might remain so for a while. "Private sector firms remained wary of costs and payroll numbers, once again, were unchanged," said Lima.
She said manufacturing needed to pick up for economic growth to continue. "Manufacturing production continued to expand but growth was sluggish by historical standards," Lima added. Nonetheless, manufacturing has been above the crucial 50-threshold in each month since November 2013.
On prices, the survey said average input costs rose in both services and manufacturing, albeit at a slower pace.
The Reserve Bank of India, however, is not expected to ease policy anytime soon, having cut its benchmark lending rate four times since January, most recently on September 29.