Services Industry Analysis

The services sector remains the engine of growth for India’s economy, contributing around 55% to the country’s Gross Value Added (GVA), up from 50.6% in FY14, with an average growth of 8.3% since FY23. It has consistently ranked first in FDI inflows, according to the Department for Promotion of Industry and Internal Trade (DPIIT), reflecting its significance as a key driver of economic expansion. The sector provides employment to a substantial portion of the Indian population and continues to be the highest employment generator in the country.

In FY26 (April-October 2025), the services sector recorded strong performance, supported by robust export demand and record hiring. India’s services exports stood at approximately Rs. 20,40,317 crore (US$ 237.55 billion), while imports were Rs. 10,20,974 crore (US$ 118.87 billion), yielding a services trade surplus of Rs. 10,19,343 crore (US$ 118.68 billion), up from Rs. 8,71,698 crore (US$ 101.49 billion) in FY25 (April-October 2024). India has also climbed to 38th position out of 133 economies in the Global Innovation Index (GII) 2025, highlighting its growing strength in knowledge and innovation.

Sales of non-IT services companies recorded a growth of 10.6% in Q2 FY26 as compared to 7.5% growth in Q1 FY26.

Employment generation in the sector continues to outpace manufacturing, with nearly three jobs created in services for every one in manufacturing. The sector currently employs about 182 million people, with trade, transport, education, finance, and healthcare being major contributors. Between April 2000 and December 2025, India’s services sector attracted FDI inflows of Rs. 8,39,105 crore (US$ 127,266 million), with Singapore emerging as the top investor, followed by Mauritius, the USA, the Netherlands, and Japan.

The financial services segment has witnessed remarkable growth. Deposits across all scheduled banks surged to Rs. 2,46,77,712.36 crore (US$ 2,873.18 billion) as of October 2025. India’s FinTech industry was valued at US$ 44.1 billion in 2025 and is projected to grow at a 16.6% CAGR through 2030. In H1 2025, the sector secured approximately US$ 889 million in funding, ranking third globally, with Bengaluru accounting for 55% of total investments.

The fintech adoption rate in India stands at 87%, significantly above the global average of 67%, reflecting the country’s rapid digital financial integration.

Telecom and IT services remain key pillars of the sector. India’s total telephone subscriber base increased from 1,228.94 million in September 2025 to 1,306.14 million in December 2025, registering a quarterly growth of 6.28%. On a year-on-year basis, the subscriber base grew by 9.77%. Correspondingly, overall tele-density in India rose from 86.65% to 91.74% during the same period.

As of December 2025, the wireless subscriber base of Jio stood at 500.61 million, followed by Bharti Airtel 466.50 million, Vodafone Idea 198.75 million, BSNL 92.77 million and MTNL 0.12 million.

The IT & BPM sector continues to grow strongly, with exports rising 12.48% in FY25 to Rs. 19,19,456 crore (US$ 224 billion), of which IT services accounted for over 65%. The sector is expected to add 1,26,000 net new employees in FY25, taking the total workforce to 5.8 million.

Healthcare and digital services have emerged as significant growth drivers. The Indian healthcare sector is projected to reach Rs. 5,467,022 crore (US$ 638 billion) by 2025, growing at a 22.5% CAGR over the past seven years. Telemedicine alone reached Rs. 31,191 crore (US$ 3.64 billion) in 2025 and is expected to grow to Rs. 90,660 crore (US$ 10.58 billion) by 2030. India's digital healthcare transformation is advancing through initiatives like the Ayushman Bharat Digital Mission (ABDM). Under the Ayushman Bharat–PMJAY, more than 15,733 private hospitals have been empanelled as of 31 December 2025, including 1,259 hospitals in aspirational districts, expanding healthcare access in underserved regions. Additionally, under the Ayushman Bharat Digital Mission (ABDM), around 8.79 crore ABHA cards were created during 2025–2026 (as of 28 January 2026), highlighting the rapid adoption of digital health infrastructure in India.

AI in healthcare is expected to contribute Rs. 2,18,325-2,61,990 crore (US$ 25-30 billion) to India’s GDP by 2025.

India’s digital health market is projected to grow from approximately US$ 14.5 billion in 2024 to nearly US$ 107 billion by 2033, highlighting the increasing reliance of healthcare systems on digital infrastructure and technology.

In November 20, 2025, Tata Consultancy Services partnered with TPG to invest up to Rs 18,000 crore in its AI data centre platform HyperVault, aimed at building GW-scale AI-ready infrastructure and strengthening India’s digital infrastructure ecosystem

The Union Budget 2025 has significantly increased allocation for the BharatNet project by 238% year-on-year to Rs. 22,000 crore (US$ 2.6 billion) in 2025–2026, aimed at expanding broadband connectivity in rural government-run secondary schools and primary healthcare centres (PHCs). The initiative targets a large opportunity base of around 1 million government-run schools, building on earlier phases where Rs. Rs 42,000 crore was allocated to connect 214,323 Gram Panchayats.

India’s 5G subscriber base is projected to surge to 1 billion by 2031, while average monthly mobile data use is expected to reach 65 GB per smartphone.

India’s data centre capacity is projected to grow from approximately 1.4 GW (as of Q2 2025) to around 8 GW by 2030. Despite generating nearly 20% of global data, the country hosts only about 3% of the world’s data centres roughly 150 out of 11,000 globally, according to NASSCOM.

Education and research infrastructure continues to expand, with 23 Indian Institutes of Technology (IITs), 21 Indian Institutes of Management (IIMs), and 20 All India Institutes of Medical Sciences (AIIMS) operational by June 2025, strengthening India’s human capital for services and technology.

Tourism, hospitality, and sustainable sectors are contributing to exports and employment. India’s tourism and hospitality sector may earn US$ 50.9 billion in visitor exports by 2028, while the sustainable tourism market is projected to grow from Rs. 317 crore (US$ 37 million) in 2025 to Rs. 1,851 crore (US$ 216 million) over the next decade.

In 2024–25, the Ministry of Tourism launched the ‘Challenge Based Destination Development’ initiative under the Swadesh Darshan 2.0 scheme to promote holistic and sustainable development of tourist destinations and enhance the overall tourist experience. Under this initiative, 38 projects have been sanctioned across the country with an investment of approximately Rs. 698 crore.

International Tourist Arrivals (ITAs), including Foreign Tourist Arrivals (FTAs) and arrivals of Non-Resident Indians (NRIs), reached 20.57 million in 2024, reflecting an 8.9% increase over 2023. Within this, medical and wellness tourism is emerging as a high-potential segment, growing faster than traditional leisure tourism and offering high-value, non-seasonal demand.

To support export growth, the government had introduced the Service Exports from India Scheme (SEIS) under FTP 2015–20, which provided duty credit scrips worth 3–7% of net foreign exchange earnings. However, the scheme was discontinued from April 1, 2020, and currently there is no direct replacement incentive for service exporters. As a result, exporters are increasingly focusing on operational efficiency and cost optimisation in international transactions.

The IT & BPM sector is poised for further growth with planned deployment of ~10 cloud platforms across key industries, enabling Indian companies to strengthen global competitiveness.

Corporate India remains optimistic, with annual salary hikes projected between 6% and 15% in 2025, depending on industry, role criticality, and niche skills. The software services sector alone is expected to grow from Rs. 13,55,530 crore (US$ 158 billion) in 2025 to Rs. 16,96,662 crore (US$ 198 billion) by 2030 at a 4.57% CAGR, driven by AI adoption, value-led partnerships, and strong talent.

India’s services sector is poised for sustained growth, underpinned by robust exports, technological adoption, and expanding employment opportunities. With advancements in digital infrastructure, fintech, healthcare, education, and tourism, the sector is strengthening India’s global competitiveness and driving innovation across multiple domains. Looking ahead, continued investment, policy support, and technology integration are set to reinforce the services sector as a key engine of economic growth, creating new opportunities for talent, businesses, and international collaboration.

Note: Services sector includes Financial, Banking, Insurance, Non-Financial/Business, Outsourcing, R&D, Courier, Tech Testing and Analysis, Other