The survey of around 400 companies rose to 55.6 in December from November s 52.1.
The 50 mark separates growth from contraction and the index has held above that level for over a year now.
“The service sector provided some holiday cheer with activity fully recovering after two months of deceleration led by a sharp rise in new business,” said HSBC economist Leif Eskesen.
The new business sub-index jumped to 57.1 in December from 54.9 in the previous month.
While there is strong overseas demand for Indian services the big questions remain about major export markets.