Service sector growing at 10% annually: CII-KPMG

Mumbai: The service sector contributed about 61% of India's GDP in 2014-15, according to a joint report by CII-KPMG. The services sector is increasingly becoming critical to the development trajectory of a country, especially since the World Bank found that the sector's contribution in poverty alleviation is greater than that of agriculture and manufacturing.

The report said the Indian service sector is growing strongly at approximately 10% per annum, making India the second fastest growing services economy in the world. India's share in global services exports was 3.2% in 2014-15, double that of its merchandise exports in global merchandise exports at 1.7%, placing India in the eighth place currently among the top ten exporters of service in the world.

Rajat Wahi, partner and head, consumer markets, KPMG in India, said, "India's young demographic profile combined with its rising literacy rate, offers it a significant competitive advantage vis-a-vis other developing economies. Along with the 'Make in India' initiative that is striving to boost the manufacturing sector, the Prime Minister has outlined a vision to represent India as a world-class services hub across sectors. Multiple stakeholders need to work cohesively to help achieve this vision."

"Technology, innovation and creativity are rapidly redefining the global economy with digitization collapsing distances and transcending borders. In the process, the impact of the services sector is turning out to be manifold and significant. India has pride of place as the fastest-growing service sector nation globally. To keep the momentum going, it is critical that stakeholders, investors and policy-makers are best equipped in strategizing for the future and tapping the best markets globally." he said.

Among key services sectors, such as IT, telecom, tourism, media and entertainment, healthcare, management consulting, logistics and professional services, IT is the largest private sector employer in India, employing more than 3.7 million people. The industry is projected to grow at 8.5 per cent in 2016 fiscal, from us$132 billion in FY2015 to US$143 billion (excluding e-commerce). IT-BPM exports in fiscal 2016 are estimated at US$108 billion.

On the other hand, the tourism sector's contribution to GDP was US$125.2 billion in 2014, and is expected to reach US$259 billion in 2025 (accounting to 7.6% of India's GDP).

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