Last Updated: July 03, 2020
Last Updated: March, 2020
The services sector is not only the dominant sector in India’s GDP, but has also attracted significant foreign investment flows, contributed significantly to exports as well as provided large-scale employment. India’s services sector covers a wide variety of activities such as trade, hotel and restaurants, transport, storage and communication, financing, insurance, real estate, business services, community, social and personal services, and services associated with construction.
As of 2018, 31.45 per cent of India’s employed population is working in the services sector.
The services sector is the key driver of India’s economic growth. The sector has contributed 54.17 per cent of India’s Gross Value Added at current price in 2018-19*. India’s services sector GVA grew at a CAGR of 6.96 per cent to US$ 1,356.49 billion in FY19* from US$ 846.84 billion in FY12. Net export estimate from April 2019 to January 2020 in services is US$ 181.20 billion and import is US$ 112.09 billion.
Nikkei India Services Purchasing Managers' Index (PMI) stood at 57.5 in February 2020, indicating an expansion. The expansion in services activity was driven by boost in capacity and demand along with favourable public policies.
Some of the developments and major investments by companies in the services sector in the recent past are as follows:
The Government of India recognises the importance of promoting growth in services sectors and provides several incentives in wide variety of sectors such as health care, tourism, education, engineering, communications, transportation, information technology, banking, finance, management, among others.
The Government of India has adopted a few initiatives in the recent past. Some of these are as follows:
Following are the achievements of the government in the past four years:
Services sector growth is governed by both domestic and global factors. The Indian facilities management market is expected to grow at 17 per cent CAGR between 2015 and 2020 and surpass the US$19 billion mark supported by booming real estate, retail, and hospitality sectors.
By 2023, healthcare industry is expected to reach US$ 132 billion. India’s digital economy is estimated to reach US$ 1 trillion by 2025. By end of 2023, India’s IT and business services sector is expected to reach US$ 14.3 billion with 8 per cent growth.
The implementation of the Goods and Services Tax (GST) has created a common national market and reduced the overall tax burden on goods. It is expected to reduce costs in the long run on account of availability of GST input credit, which will result in the reduction in prices of services.
Note: Conversion rate used as on January 2020, Re 1 = US$ 0.01402
References: Media Reports, Press Releases, DIPP publication, Press Information Bureau
Note: P - Provisional, * As per second advance estimates
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
Last Updated: July 03, 2020
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