The IHS Markit India Services Business Activity Index's reading rose to 53.3 in December from 52.7 in November, "highlighting the second-strongest rate of increase in output in over a year".
The report said that survey members linked the rise to better market conditions and new business growth.
Furthermore, the report said that the upturn in total new work was achieved with the support of international markets, with services exports rising for the tenth straight month in December.
Pollyanna de Lima, Principal Economist at IHS Markit, said: "It's encouraging to see the Indian service sector continuing to recover from the subdued performances noted in September and October."
"Worryingly, however, were the survey's results for price indicators. While inflation was subdued in the earlier part of 2019, there were three consecutive accelerations in the rate of input cost inflation this quarter. Services firms saw the fastest rise in their expenses in almost seven years in December."
The IHS Markit India Composite PMI Output Index was up from 52.7 in November to 53.7 in December, "reflecting stronger rates of expansion in both the manufacturing and service sectors".
"One factor supporting the uptick in output growth was a faster rise in aggregate new orders, the joint-strongest in over three years. Rates of increase in sales picked up among goods producers and service providers," the report said.
( With inputs from IANS )