Services Sector Remains The Backbone Of India’s Growth
India’s services sector continues to be the primary engine of economic growth, contributing over half of the country’s Gross Value Added (GVA) and playing a crucial role in employment generation, exports, and investment, according to the Economic Survey tabled in Parliament by Finance Minister Nirmala Sitharaman. The Survey notes that the sector has shown remarkable resilience amid global economic uncertainty and is gradually transitioning from traditional growth drivers to high-value, knowledge-based segments.
Supported by strong domestic demand, rapid digital transformation, and expanding global linkages, the services sector has consistently outperformed other segments of the economy in recent years. The Survey also highlights that global trade in services has grown faster than merchandise trade over the past decade, with IT, business services, finance, and professional services leading the expansion.
Global Competitiveness And Post-Pandemic Recovery
The Economic Survey underscores India’s growing strength as a global exporter of services, particularly in IT and digitally delivered services. India remains among the top global exporters of commercial services, benefiting from a skilled workforce, cost competitiveness, and increased adoption of technology. The expansion of digital public infrastructure and cross-border data flows has further enhanced India’s competitiveness in global services markets.
In the post-pandemic period, the services sector has recorded steady growth, aided by the recovery of contact-intensive segments such as tourism, hospitality, transport, and trade. High-frequency indicators, including GST collections, e-way bills, air passenger traffic, and hotel occupancy rates, point to sustained momentum in services activity. The sector has also attracted the largest share of foreign direct investment (FDI), reflecting strong investor confidence in India’s growth prospects.
Emerging Segments And The Road Ahead
While IT and IT-enabled services remain central to the sector, the Survey notes that newer areas are increasingly contributing to growth. Financial services have expanded alongside deeper digital penetration and greater formalisation. Real estate and construction-linked services have gained from urbanisation and housing demand, while logistics and transport services have benefited from infrastructure expansion and policy reforms. Tourism and travel services have seen a sharp revival, supported by rising domestic travel and improved connectivity.
The Survey also highlights the growing role of emerging services such as fintech, health services, education services, research and development, and global capability centres (GCCs). Looking ahead, it emphasises the need to strengthen skill development, promote innovation, and enhance regulatory frameworks to sustain services-led growth. With supportive policies and continued investment in human capital and technology, India’s services sector is well positioned to move from stability to new growth frontiers and remain a cornerstone of the country’s economic transformation.
(This article has been syndicated from ANI)
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