Activity in the services sector has started to lose steam.

The S&P Global India Services PMI Business Activity Index in March dipped to 57.8 after hitting a 12-year high of 59.4 a month earlier.

"India's service sector built on to the momentum gained in February with further increases in new business intakes and output at the end of the 2022-23 fiscal quarter. However, manufacturing has retaken the mantle as the main driver of growth," said Pollyanna De Lima, economics associate director at S&P Global Market Intelligence.

For the 20th straight month, the headline figure was above the neutral 50 threshold. In purchasing managers' index (PMI) parlance, a print above 50 means expansion while a score below 50 denotes contraction.

On the jobs front, the survey respondents commonly cited adequate capacities for current requirements, a factor that curbed job creation.

"Despite rising for the 10th month in a row, services employment grew only fractionally in March. Close to 98 per cent of survey participants left payroll numbers unchanged amid sufficient staff levels for current requirements," the survey said.

Manufacturing activity in the country expanded at the fastest pace in three months during March, a separate survey released earlier this week showed, but the slowdown in services growth pulled a composite index down to 58.4 from 59.0 in February.

A sub-index tracking new business inflows in the services industry declined to 58.1 from 59.5 in February and firms hired at the slowest pace in 10 months, citing adequate capacity.

Future business expectations slipped to their lowest in eight months as several firms expect no change in activity from present levels.

"Weakness was seen with regards to jobs...as a general lack of pressure on operating capacities and diminished confidence towards growth prospects prevented hiring activity," De Lima said.