The percentage of people in a country who are employed in services sector or tertiary sector jobs is a determinant of the economic development of that nation. The shift from primary and secondary activities to tertiary activities by the citizens of a country indicates that it is on the path of progress. India's services sector accounts for around 60 per cent of its gross domestic product (GDP) and has matured considerably during the last few years.
The growth in the services sector can be attributed mostly to the emergence of the Indian Information Technology (IT) and IT enabled Services (ITeS) sectors as well as e-commerce. The services sector in India comprises a wide range of activities such as transportation, logistics, financial, business process outsourcing services, healthcare, trading, and consultancies, among many others.
Furthermore, with the Government of India's liberal foreign direct investment (FDI) policies, the services sector has attracted the highest amount of foreign equity among all other sectors in the Indian economy.
The Indian services sector has attracted the highest amount of FDI equity inflows in the period April 2000-September 2014, amounting to about US$ 40,684.98 million which is about 18 per cent of the total foreign inflows, according to the Department of Industrial Policy and Promotion (DIPP).
The HSBC Purchasing Managers Index (PMI) for services stood at 52.2 points in July 2014, expanding for the third month in a row.
According to the data provided by International Data Corporation (IDC), the total mobile services market revenue in India is expected to touch US$ 37 billion in 2017 growing at a compound annual growth rate (CAGR) of 5.2 percent.
The growth in the ITeS sector has resulted in increasing competition between the different brands in the e-commerce sector. As a result, it is expected that the e-commerce sector will generate close to 150,000 jobs within the next 2-3 years.
The logistics sector in India which was valued at US$ 101 billion in 2013 is expected to grow by 10 per cent per annum to reach US$ 136 billion by 2016, according to Mr R Dinesh, Chairman, CII Institute of Logistics Advisory Council and Joint Managing Director, TVS Sons Ltd.
Some of the developments and major investments by companies in the services sector in the recent past are as follows:
India plans to double India's exports of goods and services by the end of the 12th Five-Year Plan period, over the level achieved at the end of the 11th Five-Year Plan period. The long-term objective is to double India's share in global trade by the end of 2020 through adoption of appropriate strategies.
The government of India has adopted a few initiatives in the recent past. Some of these are as follows:
Trade between India and the 10-member bloc stood at about US$ 76 billion in 2012-13. Both sides aim to increase it to US$ 100 billion by 2015 and envisage lifting import tariffs on more than 80 per cent of traded products by 2016.
India has the potential to build a US$ 100 billion software product industry by 2025 riding on its IT services market, according to Indian Software Product Industry Roundtable (iSPIRT).
Also, in the telecommunication sector, India is all set to emerge as a leading player in the virtual world by having 700 million internet users of the 4.7 billion global users by 2025, as per a Microsoft report.
Furthermore, with increase in standard of living, growing disposable income and demand for quality healthcare, sectors such as healthcare services and insurance are slated for some major growth.
Exchange Rate Used: INR 1 = US$ 0.016 as on November 27, 2014
References:Media Reports, Press Releases, DIPP publication, Press Information Bureau, Indian budget publication