Status of India’s Service Sector

Why in news?

According to National Stock Exchange (NSE) “India rapidly emerging as global hub for services exports”.

• The services sector is not only the largest contributor to India’s GDP but also a major driver of employment, foreign investment, and exports.

Service sector - Trade, hotels and restaurants, transport, storage and communication, finance, insurance, real estate, business services, community and personal services, and services associated with construction.

• Compound Annual Growth Rate (CAGR) – India is rapidly emerging as a global hub for services exports with a CAGR of 14.8% over the past 3 decades, outpacing goods exports, which grew at 9.8%.
• GVA share – It has increased its share of Gross Value Added (GVA), rising from 50.6% in FY14 to about 55.3% in FY25, with an average growth of 8.3% since FY23.

• Highlighting India’s strong position in global trade, services exports stood at approximately US$ 128 billion in FY26 (April to July 2025), while imports were US$ 65 billion.
• Global ranking – India now ranks 7^th in services exports globally with a 4.3% share, led by telecom, IT, and business services which contribute nearly 3/4^th of total service exports.
• Technology exports alone crossed $200 billion in FY25.
• Global Capability Centres (GCCs) – India has emerged as the world's largest hub for GCCs.

GCCs are offshore units set up by multinational corporations to handle a wide range of strategic, technical, and operational functions, evolving from cost-saving back offices to hubs for innovation and high-value work like research and development.

• • Their number has risen from 1,430 in FY19 to 1,700 in FY24, and is projected to touch 2,200 by FY30, employing up to 26 lakh professionals.
  • GCC market size – Expected to expand from $40 billion in FY19 to $100 billion by FY30.
• Fintech sector – Ranked 3^rd globally in 2025, raising US$ 889 million, with Bengaluru attracting 55% of investments.
• As of June 2025, India stays in the lead with the fintech adoption rate of 87%, substantially higher than the world average of 67%.
• Largest FDI inflows – The service sector is ranked 1^st in attracting Foreign Direct Investment (FDI), as per the Department for Promotion of Industry and Internal Trade.
• India's projected growth – As per the World Bank, the real GDP growth at 6.3-6.8%, with nominal growth estimated at around 12%.
• Future target – At this pace, India is set to become the world's 3^rd largest economy by 2027, overtaking Japan and Germany and to emerge as a $5-trillion economy over the next few years.
• It will be propelled by robust service exports, a young and expanding workforce, and increasing participation in capital markets.

References

1. The Hindu | India emerging as global hub for services exports
2. IBEF | Service Sector