The survey noted that despite solid upturns in new business and output, the trend in employment remained subdued.
Private sector activity in the country registered a significant uptrend and surged to a 37-month high in March, driven by marked increase in new business orders, a monthly survey said on Wednesday.
The Nikkei India Composite PMI Output Index, which maps both manufacturing and services sectors, climbed from 51.2 in February to a 37-month high of 54.3 last month.
Growth of manufacturing production also gained strength, therefore contributing to a marked expansion in the private sector output.
Meanwhile, the Nikkei Services Business Activity index rose from 51.4 in February to 54.3 in March -- its joint- highest level since June 2014.
A reading above 50 indicates expansion while a one below this level means contraction.
"March PMI surveys signalled a reassuringly robust end to the financial year for the Indian economy, with sharper increases in new business spurring activity growth in both the manufacturing and service sectors," Pollyanna De Lima, economist at Markit, which compiles the survey, said.
The survey noted that despite solid upturns in new business and output, the trend in employment remained subdued.
"One disappointment, however, is the trend in employment, which showed little change through much of 2015-16," Lima said, adding that barring mild increase in hiring seen among service providers during July, it was a broadly stagnant labour market for the past two years.
Going forward, Indian services companies remain optimistic that activity will increase further over the coming 12 months.
On prices, Lima said input costs across the private sector rose at the quickest rate in three months and charge inflation likewise accelerated, suggesting headline inflation may pickup in coming months.
Reserve Bank on Tuesday cut the key interest rate by 0.25 per cent and introduced a host of measures to smoothen liquidity supply so that banks can lend to productive sectors and indicated accommodative stance going ahead.
