MUMBAI (Reuters) - Business activity among Indian service companies grew at its fastest pace in 17 months in February, climbing for the third straight month as both output and new orders increased, a survey showed.

The HSBC Markit Business Activity Index, based on a survey of 400 firms, rose to 60.9 in February, its highest since September 2008, and compared with 59.0 in January.

"This is another excellent service sector PMI release, complementing the manufacturing PMI for the same month," said Robert Prior-Wandesforde, senior Asian economist at HSBC.

"The key business activity series is up more than 5 points since November, 20 (points) since the low in February 2009 and above the series average of 57.9," he said.

The index has been above the 50 point level that separates expansion from contraction for 10 months as the economy shakes off the impact of the global slowdown.

Before that, it shrank for six months, hitting a trough of 40.3 in February 2009.

India's manufacturing industry in February grew at its fastest pace in 20 months, expanding for the third month thanks to expanding output and new orders, a survey showed earlier this week.

"Put this together with the manufacturing PMI and it would be surprising if ex-agriculture GDP didn't grow at a double-digit pace in the first quarter of 2010," Prior-Wandesforde said.

The business expectations sub-index rose for the second straight month to 73.1 in February, its highest in four months. It stood at 66.6 in January.