Service Sector in India

Latest update: November, 2013

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Updated: November, 2013

Indian Services Sector: Brief Overview

India's services sector contributes to about 60 per cent of the country’s gross domestic product (GDP), 35 per cent of employment, a quarter of the total trade, and over half of the foreign investment inflows.

The services industry is one of the largest and fastest-growing sectors in the global market. Its contribution to the Indian economy is particularly significant, with regard to employment potential and impact on national income. This sector covers a wide range of activities, such as transportation, communication, trading, finances, real estate and health, among others.

The services industry provides massive business prospects to investors. Without the sector’s capacity to generate revenue, it would be difficult for the Indian economy to acquire the healthy place it currently enjoys on the global platform.

Key Statistics

  • The services sector received foreign direct investment (FDI) equity inflows worth Rs 179,150.49 crore (US$ 28.78 billion) in the period April 2000–August 2013, according to Department of Industrial Policy and Promotion (DIPP).
  • About 80 per cent of India's total exports are dominated by high-skilled services, such as software business services, financial services and communication services.
  • The expenditure of Indian banking and securities companies on IT products and services is expected to be around US$ 422 billion in 2013, a 13 per cent increase from 2012.

Recent Investments/ Developments

  • For the fourth consecutive year, Wipro has been ranked as the number one organization in the global R&D service provider survey conducted by leading management and advisory firm, Zinnov Management Consulting. The survey was based on companies belonging to the following seven industries: telecommunications, semiconductors, computing peripherals and storage, consumer electronics, automotive, enterprise software, and consumer software.
  • Mr Mukesh Ambani-controlled Reliance Industries Ltd (RIL) is looking to open an exclusive chicken restaurant chain in India in collaboration with 2 Sisters Food Group (2SFG), a UK-based company. RIL sees potential in the quick service restaurant (QSR) industry, which is projected to grow at 30 per cent annually. The chain, which will be known as Chicken Came First (CCF), will directly compete in India with the world's most popular chicken restaurant chain, Kentucky Fried Chicken (KFC).
  • Hardcastle Restaurants Pvt Ltd (HRPL), the master franchisee of the operations of McDonald’s restaurants in west and south India, is bringing its coffee retail format McCafé to the country. McCafé will be launched within the existing McDonald’s restaurants, with the first opening slated to be at So Bo Central outlet in Mumbai. Over 150 McCafés are expected to be set up over the next five years. Investment of Rs 3.5 million (US$ 56,234) is allocated for each McCafé format.
  • Tech Mahindra Ltd has bagged an outsourcing deal from Australian financial services firm, Perpetual, to deliver registry services. As part of the deal, the Indian company will give technology support for various superannuation and pension products of Perpetual. “We are looking to see a complete refresh of registry IT infrastructure and applications which will allow us to focus on our core strengths,” said Paul Statham, acting Group Executive of Perpetual Investments. The arrangement is believed to be a multi-million dollar deal.
  • Alvarez & Marsal (A&M), a global professional services organisation focusing on performance improvement and turnaround management, is seeking to expand its business in the country with the inception of a dedicated transaction advisory practice.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

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