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INDIA’S SERVICES
SECTOR
INSIGHTS FROM EMPLOYMENT
TRENDS AND STATE
LEVEL DYNAMICS
22002255
INDIA’S SERVICES
SECTOR
INSIGHTS FROM EMPLOYMENT
TRENDS AND STATE
LEVEL DYNAMICS
2025 India?s Services Sector:
Insights from Employment Trends and State Level Dynamics i
INDIA’S SERVICES SECTOR
INSIGHTS FROM EMPLOYMENT TRENDS
AND STATE LEVEL DYNAMICS
Services Division Team
Dr. Sonia Pant (Programme Director)
Mr. Deepak Kumar (Deputy Secretary)
Ms. Pratibha Sharma (Deputy Director)
Ms. Anisha Sawhney (Young Professional)
Suggested Citation
NITI Aayog. (2025). India’s Services Sector: Insights from Employment trends and State-level
dynamics. October 2025
Copyright and Disclaimer
Copyright © NITI Aayog, 2025
Every care has been taken to provide correct and up-to-date information with references.
However, NITI Aayog shall not be liable for any loss or damage whatsoever, including incidental or
consequential loss or damage, arising out of, or in connection with, any use of or reliance on the
information contained in this document. Readers should note that this document may be subject
to revisions.
NITI Aayog
Government of India, Sansad Marg, New Delhi-110001, India India?s Services Sector:
Insights from Employment Trends and State Level Dynamics iii
Foreword by VC India?s Services Sector:
Insights from Employment Trends and State Level Dynamics v India?s Services Sector:
Insights from Employment Trends and State Level Dynamics vii India?s Services Sector:
Insights from Employment Trends and State Level Dynamics ix
Message
by PD India?s Services Sector:
Insights from Employment Trends and State Level Dynamics x
India?s Services Sector:
Insights from Employment Trends and State Level Dynamics xi
Contents
Executive Summary...............................................................................................................................................1
1. Introduction.........................................................................................................................................................4
2. Global services employment landscape...................................................................................................8
2.1 Global employment shifts towards services .....................................................................................................................8
2.2 Comparative employment elasticity across countries ............................................................................................9
3. Aggregate trends and elasticity in services.......................................................................................... 14
3.1 Growth in employment: Share and Numbers.................................................................................................................15
3.2 Elasticity of employment: Sectoral insights .....................................................................................................................16
4. Understanding employment in India’s services:
workers, workplaces and conditions………..................................................................................................20
4.1 Spatial Distribution: Urban concentration .....................................................................................................................20
4.2 Gender Participation: Women in urban services, rural gaps persist ...........................................................23
4.3 Employment type: Dominance of regular wage work and self-employment ..................................26
4.4 Age Profile: Dominance of prime-age workforce......................................................................................................29
4.5 Educational Attainment: Job access and stratification.........................................................................................30
4.6 Informality: Limited access to social security benefits ..........................................................................................32
4.7 Earnings inequality in India: Sectoral and gender dimensions......................................................................37
5. Employment patterns across sub-sectors and regions....................................................................42
5.1 Major Sub-sectors by employment and responsiveness .................................................................................... 42
5.2 State-wise services employment shares and trends................................................................................................47
5.3 Comparative dynamics across states and sub-sectors: 2011–12 vs 2023–24..................................52
6. Policy Unlocks.................................................................................................................................................60
7. Conclusions.......................................................................................................................................................66
References.............................................................................................................................................................70
Annexure 1.............................................................................................................................................................74
Heuristic Concordance Table.......................................................................................................................................... 74
Annexure 2.............................................................................................................................................................76
Sub-sectoral Employment by NIC-2008 Industry Groups................................................................................ 76
Annexure 3.............................................................................................................................................................79
Sub-sector share in each state’s services employment share in 2023-24.................................................79
Annexure 4............................................................................................................................................................81
State Profiles and Recommendations........................................................................................................................81 India?s Services Sector:
Insights from Employment Trends and State Level Dynamics xii
List of Figures
Figure 2.1: Share of employment by sector and World Bank income groups, 1992 to 2022 ��������������8
Figure 2.2: Employment share by sector (world)...................................................................................................9
Figure 2.3: Employment share by sector (India)........................................................................................................9
Figure 3.1: Estimated workers in India, by industry and type of employment..........................................14
Figure 3.2: Share of employment by industry............................................................................................................15
Figure 3.3: Share of employment in services sector...............................................................................................16
Figure 3.4: Number of workers in services sector in India (in millions).........................................................16
Figure 3.5: Sectoral shares of GVA and employment with overall employment elasticity...................18
Figure 4.1: Trend of location-wise & sector-wise distribution of employment........................................20
Figure 4.2: Sectoral share of employment by loaction and gender (2023-24).........................................21
Figure 4.3: Location-wise distribution of services sub-sectors........................................................................ 22
Figure 4.4: Trend of gender-wise & sector-wise distribution of employment...........................................23
Figure 4.5: Sectoral share of employment by gender and location (2023-24)........................................24
Figure 4.6: Service Sub-sector Category with Area and Gender distribution (2023-24)....................24
Figure 4.7: Sector-wise type of employment (2023-24).....................................................................................26
Figure 4.8: Sub-sector wise type of employment in tertiary sector...............................................................28
Figure 4.9: Percentage distribution of persons by usual status (ps+ss) for
each age-group (Services Sector)..........................................................................................................29
Figure 4.10: Percentage distribution of services sector workers for each high level of education
successfully completed (2023-24).........................................................................................................30
Figure 4.11: Average number of years in formal education for workers
(ps+ss) with age (2023-24)...........................................................................................................................31
Figure 4.12: Informal and formal employment distribution in sectors (2023-24)......................................33
Figure 4.13: Informal employment distribution in the services sector (%) (2023-24).............................34
Figure 4.14: Average wage earnings (₹) per day from casual labour work (2023-24)...........................37
Figure 4.15: Average wage earnings (₹) per day from casual labour work
in the tertiary sector (2023-24)................................................................................................................38
Figure 4.16: Rural-urban wage gap and female labour force
participation across sectors (2023-24).................................................................................................39
Figure 5.1: Top sectors in services sector employment in India....................................................................44
Figure 5.2: Bottom sectors in service sector employment in India...............................................................44
Figure 5.3: Sub-sector elasticity with sub sector share
in GVA and services Employment (2023-24)...................................................................................46
Figure 5.4: Share in service sector Employment (%) in 2023-24....................................................................49
Figure 5.5: Number of usually working population in service sector (in millions).................................49
Figure 5.6: Share of leading state across service sub-sectors (2011-12 vs 2023-24)..............................53
Figure 5.7: State-wise Distribution of Services Sector Employment:
Share (%) vs Workforce Size (Million), 2023–24............................................................................... 57 India?s Services Sector:
Insights from Employment Trends and State Level Dynamics xiii
List of Tables
Table 3.1: Sector-wise employment elasticity using CAGR approach.............................................................17
Table 4.1: Number of workers by sector and sub-sector (in million)..............................................................27
Table 5.1: Number of workers in service sub-sectors (concordance group, in millions).......................43
Table 5.2: Sub-sector wise employment elasticity using CAGR approach..................................................45
Table 5.3: Share of usually working persons (ps+ss) in services sector for each State/ U
(arranged in descending order for the year 2023-24).....................................................................48
Table 6.1: Summary of key findings and associated recommendations........................................................63 India?s Services Sector:
Insights from Employment Trends and State Level Dynamics xiv
List of abbreviations
ABBREVIATIONFULL FORM
AIArtificial Intelligence
AIIMSAll India Institute of Medical Sciences
AEDPCApprenticeship Embedded Degree Programme for Colleges
BPOBusiness Process Outsourcing
CAGRCompound Annual Growth Rate
COVIDCoronavirus Disease
DFCDedicated Freight Corridors
EVElectric Vehicle
GCCGlobal Capability Centre
GDPGross Domestic Product
GVAGross Value Added
GSVAGross State Value Added
ICT Information & Communication Technology
ILOInternational Labour Organization
ITInformation Technology
ITESInformation Technology-enabled Services
ITIIndustrial Training Institute
IITIndian Institute of Technology
IIMIndian Institute of Management
LICLow-Income Country
LMICLower-Middle-Income Country
MOSPIMinistry of Statistics and Programme Implementation
MOOCMassive Open Online Course
NICNational Industrial Classification
NIELIT National Institute of Electronics & Information Technology
NIFT National Institute of Fashion Technology
NIT National Institute of Technology
NITINational Institution for Transforming India
NFSUNational Forensic Sciences University
NSSNational Sample Survey
OTTOver-The-Top
PLFSPeriodic Labour Force Survey India?s Services Sector:
Insights from Employment Trends and State Level Dynamics xv
ABBREVIATIONFULL FORM
PMIPurchasing Managers’ Index
PLIProduction Linked Incentive
PHCPrimary Health Centre
R&DResearch and Development
RGNIYDRajiv Gandhi National Institute of Youth Development
S&PStandard & Poor’s
SHGSelf-Help Groups
STEMScience, Technology, Engineering and Mathematics
UICUpper-Income Country
UMICUpper-Middle-Income Country
UPSSUsual Principal and Subsidiary Status
UTUnion Territory
WTOWorld Trade Organization India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 1
Services at the Core of India’s Employment Transition
India’s services sector has emerged as both the backbone of the economy and the second-largest
source of employment. In 2023–24, it engaged nearly 188 million workers, absorbing labour at scale
and displaying resilience in the face of shocks such as the COVID-19 pandemic. Yet, this strength is
marked by a paradox. While services contribute over half of national output, they provide less than
a third of jobs, most of which are informal and low-paying. This disconnect between growth and
employment defines the central challenge for India’s services-led development.
This report is among the first dedicated assessments of employment in the services sector, going
beyond aggregate trends to present a disaggregated and multi-dimensional profile of the services
workforce. By linking historical insights from the NSS 68th Round (2011–12) with the latest PLFS
data (2017–18 to 2023–24), it provides a long-run perspective on structural shifts. In doing so, it
offers a comprehensive understanding of the sector’s employment landscape and its implications
for inclusive growth.
Mapping the Employment Landscape
Services have added nearly 40 million jobs in the past six years, with employment elasticity rising
to 0.63 in the post-COVID recovery, second only to construction. These numbers demonstrate the
sector’s potential as a labour shock absorber. At the same time, the distribution of employment
reveals a deep structural divide. High-value segments such as information technology, finance,
healthcare, and professional services are globally competitive and productivity-rich, but their
employment base remains small. In contrast, traditional services such as trade and transport
continue to dominate the workforce, though they are characterised by high levels of informality
and limited wage growth.
The report situates these patterns in a broader comparative context, showing how India’s transition
has been slower than that of other middle-income economies.
A Disaggregated Profile of Services Employment
Moving beyond headline figures, the analysis examines services employment across seven
dimensions: spatial distribution, gender participation, employment type, age profile, education,
informality, and earnings. Together, these provide a layered picture of who works in services, under
what conditions, and with what outcomes.
The evidence points to an urban-led expansion, with over 60% of urban workers employed in
services compared to less than 20% in rural areas. Gender divides remain striking: only 10.5% of
rural women are engaged in services compared to 60% of their urban counterparts, and their
participation is largely confined to low-value activities. Employment type shows a dual character
with services offering India’s highest share of regular wage jobs, yet almost half of the workforce
remains self-employed, with limited social protection. Prime-age workers dominate the sector, but
younger entrants and older workers face barriers to stable participation. Education improves access
to better-quality jobs, though even graduates often encounter informality and underemployment.
Informal work remains pervasive across sub-sectors, with 87% of all services workers lacking access
EXECUTIVE SUMMARY India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 2
to social security. Earnings too display sharp inequalities, with women in rural services earning
less than half of men’s wages, even as a few high-value sub-sectors such as ICT and healthcare
demonstrate pathways towards parity.
Sub-Sectoral and Regional Divergence
The sector’s growth story is also uneven across sub-sectors and states. At the sub-sectoral level,
trade, transport, and education continue to anchor employment, together accounting for over two-
thirds of services jobs. Yet their capacity to generate new work is slowing. In contrast, emerging
sub-sectors like information technology, finance, healthcare, and professional services display
higher employment elasticity and wage potential, but remain limited in scale. This imbalance reflects
the central tension in India’s services economy: employment growth is concentrated in traditional,
low-value segments, while productivity and wage gains accrue in modern services that employ
relatively few workers.
States such as Maharashtra, Tamil Nadu, Karnataka, and Telangana have built vibrant service hubs
with high productivity, while Bihar, Madhya Pradesh, and others remain concentrated in low-value,
traditional segments. The inclusion of state-level annexure with tailored policy recommendations
marks a distinctive contribution of this report, enabling targeted strategies for regional transformation.
Unlocking the Sector’s Potential
The findings underscore three persistent challenges: widespread informality and poor job quality,
deep gender and spatial divides, and regional divergence in opportunities. Addressing these will
require a new policy approach that treats services as a central pillar of India’s employment strategy
rather than as a residual sector.
The report outlines a four-pillar roadmap. First, accelerating formalisation and extending social
protection to self-employed, gig, and MSME workers is critical for improving job quality. Second,
enabling women and rural youth to access high-growth services through targeted skilling, digital
infrastructure, and safe mobility can unlock latent labour reserves. Third, investing in technology-
led skilling will prepare workers for the twin transitions of digitalisation and the green economy.
Finally, balanced regional growth can be fostered by supporting service hubs in Tier 2 and Tier 3
cities and promoting state-level sectoral clusters.
Towards Viksit Bharat @2047
This report positions services not merely as a safety net but as the springboard for opportunity,
equity, and resilience. By combining historical context, disaggregated profiles, sub-sectoral and
state-level insights, and elasticity-based assessments, it provides a rich evidence base for policy.
Unlocking the full potential of services employment will be central to achieving the vision of Viksit
Bharat @2047, where growth is matched by broad-based, high-quality jobs that sustain an inclusive
and competitive economy.
1. Introduction India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 4
1. Introduction
Services in India have experienced substantial growth over the past few decades, transforming
into a central pillar of the country’s economic output. Their contribution to Gross Value Added
(GVA) has consistently expanded, yet this growth has not been matched by a commensurate rise in
employment. This disconnect raises critical questions about the inclusiveness and labour absorption
capacity of services-led growth. In many advanced and emerging economies, the expansion of
services has gone hand in hand with broad-based job creation. In India, however, the decoupling
of output and employment is especially pronounced: services contribute over 50% of GVA but
account for only around 30% of total employment.
Empirical literature consistently points to this divergence. Bosworth and Maerens (2010) and
Kochhar, Kumar, and Chatterjee (2006) highlight the sector’s rising share in national income
alongside sluggish employment growth, underscoring a disconnect between output expansion and
job creation. More recent analysis by Bardhan et al. (2024) affirms the services sector’s expanding
economic footprint, while also drawing attention to its latent potential for employment generation,
particularly in higher skill–intensity and technology-diffusion segments.
Employment elasticity data further reinforces this diagnosis. Misra and Suresh (2014) report a
fall in aggregate elasticity during the post-reform decades, with agriculture turning negative and
construction emerging as the most reliable absorber of labour. Within services, certain sub-sectors
such as finance, insurance, and business services have shown increasing elasticity (Dasgupta and
Singh, 2005). Yet, a high degree of informality continues to characterise services. As Sundaram
(2014) and Jha (2017) note, much of service employment remains informal, part-time, and low-
productivity, raising concerns about the sector’s ability to support equitable and sustainable growth.
Looking ahead, emerging technologies introduce both risks and opportunities. Artificial Intelligence
(AI) in particular is poised to reshape labour markets on a scale comparable to the Industrial
Revolution. The World Economic Forum’s Future of Jobs Report 2025 projects that AI will disrupt
22% of jobs worldwide by 2030, creating 170 million new roles, displacing 92 million, and yielding a
net gain of 78 million. In India, AI could automate as much as 40–50% of white-collar roles (Kumar,
2024), even as demand for AI and big data specialists is expected to rise by over 60%. Clerical and
data-entry roles are among the most vulnerable. With 39% of core job skills projected to change,
large-scale, collaborative upskilling will be essential to keep both formal and informal workers
competitive in an increasingly digital economy.
Together, these trends underscore the need for a more nuanced understanding of how the services
sector is (or is not) generating employment. While numerous studies have examined aggregate
employment trends, a disaggregated analysis is essential to identify where opportunities exist and
how inclusion can be improved.
This report builds on the NITI Aayog Working Paper Identifying Potential Service Sub-Sectors:
Insights from GVA, Exports and Employment Data (Pant et al., 2024), which highlighted that several
service sub-sectors display high growth and export performance but limited transmission to the
labour market. In particular, it identified a disconnect between value addition and employment
generation in key service activities. Extending that analysis, the present report takes a closer look at
the employment dimension, examining patterns across location, gender, age, education, informality,
and earnings, as well as sub-sectoral and regional variations.1
Introduction India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 5
The analysis draws on data from the National Sample Survey (NSS) 68
th
Round (2011–12) and the
Periodic Labour Force Survey (PLFS) for 2017–18 to 2023–24. While methodological differences
limit direct comparability, these datasets collectively enable an assessment of structural shifts over
time. The report focuses on workers classified under the Usual Principal and Subsidiary Status
(UPSS)
1
, which offers a more stable and representative picture of long-term employment trends,
in contrast to the Current Weekly Status (CWS), which captures shorter-term work (ILO India
Employment Report 2024).
The report is organised as follows: Chapter 2 provides an international context by summarising
global employment trends in services and elasticity patterns. Chapter 3 examines aggregate
employment trends in India’s services sector, including employment shares, worker growth, and
responsiveness to output. Chapter 4 presents a disaggregated employment profile by location,
gender, age, education, informality, and earnings. Chapter 5 analyses sub-sectoral and state-level
patterns of employment. The final chapters offer policy unlocks and concluding insights to guide
India’s services sector towards becoming a driver of inclusive and sustainable employment growth.
1 Usual status activity considers principal and subsidiary status(ps+ss): those who perform some work activity either in the principal status
(relatively longer time (i.e. major time criterion) during the 365 days preceding the date of survey) or in the subsidiary status (relatively
shorter time throughout the reference year of 365 days preceding the date of survey or for minor period (not less than 30 days), during
the reference period) India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 6
1. Introduction
India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 7
2. Global services
employment
landscape India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 8
Services have become the defining engine of employment worldwide, reshaping labour markets
as countries transition from agrarian and industrial economies to service-oriented ones. Examining
global employment shifts and cross-country elasticity patterns provides essential context to assess
India’s performance and challenges.
2.1 Global employment shifts towards services
Over the past three decades, services have expanded rapidly as a source of employment worldwide.
Between 1992 and 2022, the global share of workers employed in services rose from 35.5% to 49.8%
(ILO, 2022). High-income countries saw services employment increase by 12.3 percentage points,
while upper-middle-income countries experienced the sharpest rise of 21.8 percentage points. Even
low- and lower-middle-income countries recorded increases of 11.3 and 10.9 percentage points,
respectively (Figure 2.1)
2
.
In contrast, India’s transition has been slower. The services’ share of employment grew from 22.1%
in 1992 to 31.0% in 2022 (World Bank, 2022), an increase of only 8.9 percentage points, much
below the global average. Figures 2.2 and 2.3 illustrate this gap.
Figure 2.1: Share of employment by sector and World Bank income groups, 1992 to 2022
22%
26%
28%
31%
36%
41%
46%
50%
20%
22%
27%
31%
30%
37%
45%
52%
27%
32%
35%
38%
62%
68%
73%
75%
0%
20%
40%
60%
80%
100%
1992
2002
2012
2022
1992
2002
2012
2022
1992
2002
2012
2022
1992
2002
2012
2022
1992
2002
2012
2022
1992
2002
2012
2022
India world LIC UMIC LMIC HIC
Sector-wise employment share %
Year and Income groups
Agriculture Industry Services
Source: ILO
2 World Bank classifies countries into four income groups, based on their Gross National Income (GNI) per capita. Low-income countries
have GNI per capita of $1,135 or less; Lower-middle-income countries between $1,136 and $4,465; Upper-middle-income countries be-
tween $4,466 and $13,845 and High-income countries have GNI per capita of $13,846 or more.2
Global services employment landscape India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 9
Figure 2.2: Employment share by sector (world) Figure 2.3: Employment share by sector (India)
37.8%
49.6%
49.7%
0
10
20
30
40
50
60
70
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
2017
2019
2021
Sector-wise employment share %
Year
22.6%
31.5%
31.0%
0
10
20
30
40
50
60
70
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
2017
2019
2021
Sector-wise employment share %
Year
Source: ILO
In high- and middle-income peers, structural transformation has been marked by a decisive
movement of workers into services, both in terms of value addition and employment. In India,
however, the expansion of services has been largely output-intensive rather than employment-
intensive. As Jha (2017) notes, this reflects a structural disconnect: services contribute more than
50% of GVA but provide jobs to only about one-third of workers.
2.2 Comparative employment elasticity across countries
Employment elasticity, defined as the percentage change in employment associated with a one
per cent change in output/ GVA, serves as a sharper metric to assess job intensity. Cross-country
evidence shows that services typically account for the highest elasticities, especially in middle-
income economies. For 1992–2011, elasticity estimates ranged from 0.056 in low-income countries
to 0.188 in high-income countries, indicating that the employment-generating capacity of services
strengthens with economic development (World Bank, 2024).
However, in many developing economies, recorded gains largely reflect the formalisation of existing
informal work rather than net job creation. Examples include retail trade, logistics, or delivery
services, where workers who previously operated informally are now registered on payrolls or digital
platforms. While such shifts improve job quality, they do not significantly expand the employment
base.
According to the World Bank (2024), over 80% of sectoral elasticities in manufacturing and services
fall between 0 and 1, with half clustering in the 0.25–0.75 range. In contrast, agriculture displays
much weaker elasticities, with 60% of countries reporting values below 0.25, and one-third even
recording negative elasticities, reflecting the impact of mechanisation and declining labour intensity.
India’s experience aligns with these broad patterns but reveals important constraints. Historical
estimates suggest that service elasticity in India ranged between 0.2 and 0.4 during 1992–2011,
below many middle-income peers (World Bank, 2024). In comparison, manufacturing recorded
stronger responsiveness, with elasticity between 0.3 and 0.5. Within services, some sub-sectors India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 10
such as finance, insurance, real estate, and business services showed increasing elasticity during
the post-reform years (Dasgupta & Singh, 2005). Yet, persistent informality, skills mismatches, and
uneven regional growth have kept aggregate elasticity moderate (Misra & Suresh, 2014).
Box 1: Global Employment index– Trends in Services and Manufacturing
The J.P. Morgan Global Purchasing Managers’ Index (PMI), compiled by S&P Global, provides timely insights
into global economic activity across key sectors. The PMI covers a broad range of indicator, including business
activity, new orders, export demand, employment, and input/output prices. Among these, the employment
sub-index serves as a high-frequency proxy for changes in labour demand across sectors and geographies.
This box draws on monthly employment data from the Global PMI to track emerging trends in services and
manufacturing over the past year.
JP Morgan Global PMI – Employment
35
40
45
50
55
Apr-20
Jun-20
Aug-20
Oct-20
Dec-20
Feb-21
Apr-21
Jun-21
Aug-21
Oct-21
Dec-21
Feb-22
Apr-22
Jun-22
Aug-22
Oct-22
Dec-22
Feb-23
Apr-23
Jun-23
Aug-23
Oct-23
Dec-23
Feb-24
Apr-24
Jun-24
Aug-24
Oct-24
Dec-24
Feb-25
Apr-25
Jun-25
Aug-25
Manufacturing Services
Source: S&P Global
The JP Morgan Global PMI highlights a clear divergence between services and manufacturing employment over the
past year. The global services employment PMI has consistently stayed above 50 from May 2024 to August 2025,
signalling ongoing expansion and sustained growth in global services employment. In contrast, the manufacturing
employment showed prolonged weakness, with its PMI remaining below the 50-threshold for twelve consecutive
months (August 2024 to July 2025), reflecting continued contraction, before inching up to 50.2 in August 2025,
suggesting only a marginal recovery.
This continued strength in services employment demonstrates the sector’s growing resilience and its increasingly
central role in shaping global labour market trends. Within services, the strongest employment gains have been
observed in business services, information technology, healthcare, transportation and logistics, and consumer-
facing segments such as hospitality and retail (S&P Global, 2025; ILO, 2023). These sub-sectors have benefited
from post-pandemic digitalisation, rising consumer demand, and sustained investment in infrastructure and public
services.
The expansion in services employment reflects both cyclical recovery and deeper structural shifts in global production
and consumption patterns. The data signals that services are not only absorbing a growing share of output but are
also becoming the primary drivers of employment growth in the post-pandemic global economy. The continued
divergence between manufacturing and services also mirrors broader trends in structural transformation, where
capital intensity and automation increasingly limit job creation in industry, while services retain a more elastic and
adaptable employment structure.
Source: Authors’ interpretation based on JP Morgan Global PMI- Employment data from S&P Global India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 11
Key Takeaways
• Globally, services account for nearly 50% of employment; India lags at ~30%, reflecting a
slower transition.
• India’s services expansion has been more output-intensive than employment-intensive,
showing a disconnect between GVA and job creation.
• With employment elasticity ranging between just 0.2 and 0.4, India’s services sector trails
many middle-income economies in its ability to convert growth into jobs.
• Strengthening employment intensity in services is critical to avoid a jobless growth
trajectory as India aspires for developed status by 2047. India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 12
1. Introduction
India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 13
3. Aggregate trends
and elasticity in
services India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 14
A clear understanding of how India’s workforce is distributed across agriculture, industry, and
services is essential to assess the economy’s labour absorption capacity. Despite the growing
dominance of services in output over recent decades, employment distribution remains imbalanced
across sectors.
India’s workforce in 2023–24 was estimated at approximately 634 million workers, distributed across
agriculture (292 million), industry (153 million), and services (188 million). Agriculture continues to
dominate numerically, even as its share in value added has sharply declined. Services have emerged
as the second-largest employer, with rising job numbers alongside their growing contribution
to national income. Industry, while critical for investment and output, engages a comparatively
smaller share of workers. Figure 3.1 provides a snapshot of this distribution. These estimates have
been derived by combining UN population figures with workforce participation shares from PLFS
2023–24.
Figure 3.1: Estimated workers in India, by industry and type of employment
Source: Authors’ calculation using PLFS (2023-24); India population figure sourced from UN population statistics
This chapter also looks at how employment in India’s services sector has evolved in recent years. It
draws primarily on data from the PLFS, which has been conducted annually since 2017–18. To provide
some historical perspective, data from the National Sample Survey (NSS) 68
th
Round (2011–12) is
also used. However, due to differences in the way the two surveys are structured, these datasets are
not directly comparable. GVA data is drawn from national accounts (MoSPI) and aligned to PLFS
reference years to maintain consistency when calculating employment elasticity. 3
Aggregate trends and elasticity in
services India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 15
For this analysis, the services sector is defined using the National Industrial Classification (NIC)
2008, covering industry groups G to U. These groups encompass a wide range of activities that
focus on providing services. The classification includes various industries like trade, transportation,
communication, financial services, education, health, and public administration, among others.
Specifically, NIC 2008 Group G pertains to wholesale and retail trade, encompassing both the sale
of goods and related services. Group H covers transport, storage, and communication services,
including rail, road, air transport, and postal services. Group I includes accommodation and food
service activities, reflecting the tourism and hospitality industry. Group J focuses on information and
communication, including software development, telecommunications, and broadcasting. Group
K pertains to financial and insurance services, involving banking, insurance, and other financial
services. Group L includes real estate and rental services, highlighting property management and
rental markets. Group M represents professional, scientific, and technical services, such as legal,
accounting, architectural, and consulting services. Group N covers administrative and support
service activities, including employment agencies, security services, and travel agencies. Group O
refers to public administration and defence, where government-related activities are categorised.
Group P includes education, ranging from primary to higher education and training. Group Q covers
human health and social work, encompassing healthcare services and social welfare services. Group
R pertains to arts, entertainment, and recreation, focusing on cultural and leisure activities. Group
S covers other services such as repair services, personal services, and membership organisations.
Group T includes activities of households as employers, while Group U includes activities of
extraterritorial organisations and bodies, such as foreign embassies and international organisations.
These categories collectively provide a comprehensive view of the vast services sector in India,
reflecting its diversity and significance within the broader economy. To provide further context, the
agriculture sector is classified under Group A, mining & quarrying under Group B, manufacturing
under Group C, utilities under Group D and E, and construction under Group F, as per the NIC 2008
classification.
3.1 Growth in employment: Share and Numbers
The share of services in total employment has expanded steadily over the past decade, though with
fluctuations linked to macroeconomic shocks.
Figure 3.2: Share of employment by industry
48.9
44.1
42.5
45.6
46.5
45.5
45.8
46.1
26.9
31.0
32.4
30.8
29.6
29.7
28.9
29.7
10.6 11.7 12.1 11.6 12.1 12.4 13.0 12.0
12.6 12.1 12.1 11.2 10.9 11.6 11.4 11.4
0
20
40
60
80
100
2011-12
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
2023-24
Sector-wise employment share %
Year
Agriculture, forestry and fishing (A) Services (G-U)
Construction (F)Manufacturing (C)
Utilities (D+E)Mining and quarrying (B)
Source: MoSPI 68
th
Round, PLFS (2017-18 to 2023-24) India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 16
As shown in Figure 3.2, in 2011-12, 26.9% of the workforce was employed in services, and by 2017-18,
this share had increased to 31.0%. The share continued to grow, reaching 32.4% in 2018-19, marking
the peak during this period. However, the subsequent years saw a decline in employment in services.
In 2019-20, the share dropped to 30.8%, and further decreased to 29.6% in 2020-21, likely due to the
economic disruptions caused by the COVID-19 pandemic. Following the decline, services showed a
slight recovery, with their employment share increasing marginally to 29.7% in 2021-22. However, this
was followed by another slight decrease to 28.9% in 2022-23, before a minor rebound to 29.7% in 2023-
24. These fluctuations reflect the sector’s sensitivity to exogenous shocks like pandemics, economic
conditions, government policies, and global events.
Despite these fluctuations, services remain India’s second-largest source of employment after agriculture.
The sector has demonstrated resilience by absorbing shocks and regaining momentum in the post-
COVID years. Agriculture continues to employ the largest share of the workforce, although its share
has dropped from 48.9% in 2011-12 to 46.1% in 2023-24. Manufacturing and construction also contribute
significantly to employment, accounting for 11.4% and 12% of the workforce in 2023-24, respectively.
Figure 3.3: Share of employment
in services sector
Figure 3.4: Number of workers in services sector in
India (in millions)
26.9%
31.0%
32.4%
30.8%
29.6%
29.7%
28.9%
29.7%
0
5
10
15
20
25
30
35
2011-12
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
2023-24
%
133
148
159
165167168
171
188
-
20
40
60
80
100
120
140
160
180
200
2011-12
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
2023-24
Millions
Source: MoSPI 68
th
Round, PLFS (2017-18 to 2023-24)Source: Calculations based on MoSPI 68
th
Round, PLFS
(2017-18 to 2023-24)
In absolute terms, employment has continued to expand. In 2023–24, approximately 188 million
workers
3
were employed in services. This represents a net addition of 40 million jobs over the last
six years, underlining the sector’s ability to generate employment at scale (Figures 3.3 & 3.4).
These estimates are based on the authors’ calculations using PLFS data from 2017–18 to 2023–24
and UN population figures for the corresponding years.
3.2 Elasticity of employment: Sectoral insights
Employment elasticity is particularly relevant for a country like India, where promoting inclusive
growth requires not only a focus on higher GVA but also on creating sufficient employment
opportunities, particularly in the formal sector.
3 Based on authors’ calculations using data available in the PLFS India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 17
Two approaches are typically used to calculate employment elasticity - the Compound Annual
Growth Rate (CAGR) method (“arc” elasticity
4
) and regression-based “point” elasticity. Given the
gaps in employment data series, this report applies the CAGR approach for three distinct periods:
the pre-COVID years (2011–12 to 2019–20), the post-COVID recovery (2021–22 to 2023–24), and the
overall 2011–12 to 2023–24 horizon.
The results, presented in Table 3.1, reveal a heterogeneous pattern in the responsiveness of
employment to output growth.
Table 3.1: Sector-wise employment elasticity using the CAGR approach
Sector
Pre-COVID Period
(2011–12 to 2019–20)
Post-COVID Period
(2021–22 to 2023–24) Overall
(2011–12 to 2023–24)
Agriculture, forestry & fishing0.041.510.41
Mining & quarrying-2.81-3.49-2.48
Manufacturing-0.081.070.22
Electricity, gas, water supply & utilities0.540.520.42
Construction0.590.420.60
Services 0.350.630.43
Source: Calculations based on MoSPI 68th Round, PLFS (2017-18 to 2023-24); NAS 2025 MoSPI
Pre-COVID (2011–12 to 2019–20): Elasticity remained modest in most sectors. Agriculture recorded
near-zero responsiveness (0.04), reflecting structural underemployment and low productivity
despite rising output. Mining and quarrying showed a sharply neWgative elasticity (–2.81), indicating
job losses due to mechanisation and capital intensity. Manufacturing elasticity was also near zero
(–0.08), marking a phase of jobless growth. In contrast, utilities registered positive elasticity (0.54),
though from a small base. Construction performed best (0.59), affirming its role as a major absorber
of semi-skilled and unskilled labour. Services registered moderate elasticity (0.35), reflecting some
labour absorption but weaker than its output contribution would suggest.
Post-COVID (2021–22 to 2023–24): The recovery phase brought notable shifts. Agriculture’s
elasticity jumped to 1.51, driven largely by fallback employment during urban economic disruption
rather than productivity-linked gains. Mining and quarrying deteriorated further (–3.49), underscoring
its structural decline. Manufacturing rebounded strongly to 1.07, supported by cyclical recovery and
policy measures such as the Production Linked Incentive (PLI) scheme. Utilities remained stable
at 0.52. Construction weakened slightly (0.42), reflecting the pandemic’s drag on building activity.
Services improved sharply to 0.63, highlighting their role in absorbing displaced and returning
workers. As Ghosh and Bardhan (2025) observe, this marks a renewed alignment between growth
and job creation, with labour-intensive service segments driving post-pandemic employment
recovery.
Overall (2011–12 to 2023–24): Construction (0.60) and services (0.43) emerge as the most consistent
employment absorbers, confirming their central role in labour market adjustment. Agriculture
averaged 0.41, but this conceals long-term stagnation offset by temporary pandemic distortions.
Manufacturing’s overall elasticity was modest at 0.22, pointing to limited job intensity despite policy
push. Utilities maintained moderate responsiveness (0.42) from a small base. Mining and quarrying
remained structurally negative (–2.48), reflecting long-term capital-intensive restructuring.
4 The formula for calculation of ‘arc’ elasticity of employment is e = ∆L/L / ∆Y/Y, where L denotes employment and Y denotes GDP for the
country. India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 18
Figure 3.5 provides a three-dimensional view of employment patterns. The horizontal axis shows
sectoral GVA share, the vertical axis plots employment share, and the bubble size represents
elasticity. Mining is excluded from the figure due to persistently negative elasticity (–2.48).
Figure 3.5: Sectoral shares of GVA and employment with overall employment elasticity
Agriculture, forestry and
fishing , 0.41
Manufacturing, 0.22
Utilities, 0.42
Construction, 0.60
Services, 0.43
-10
0
10
20
30
40
50
60
-10 0 10 20 30 40 50 60
Sectoral Employment Share %
Sectoral GVA Share %
Note: Mining and quarrying sector is excluded from the graph as it reports negative elasticity -2.48 from 2011-12 to 2023-24;
Bubble size represents sectoral employment elasticity, calculated using the CAGR approach (2011-12 to 2023-24)
Source: PLFS (2023-24) and NAS 2025 MoSPI
The chart underscores distinct sectoral roles. Services combine a high GVA share (~50%), a rising
employment share (~30%), and moderate elasticity (0.43), reflecting their central position in
India’s growth-employment nexus. Construction, with modest GVA but high elasticity (0.60),
stands out as a key generator of low-skilled, labour-intensive jobs, though predominantly informal.
Manufacturing shows low overall elasticity (0.22), highlighting that output gains, despite a strong
post-COVID rebound (1.07), are not translating into sustained employment. Agriculture, which still
engages ~45–50% of workers, displays moderate elasticity (0.41) but limited long-term job creation.
Utilities remain small in both output and employment, yet demonstrate responsiveness (0.42).
Key Takeaways
• Services employ 188 million workers (2023–24), second only to agriculture, and have
added 40 million jobs in six years.
• Employment elasticity in services rose to 0.63 post-COVID, highlighting the sector’s role
as a labour shock absorber.
• Within the economy, only construction and services stand out as consistent job creators;
manufacturing lags with weaker responsiveness.
• Despite fluctuations, services remain the backbone of non-farm employment growth.
Emp Elasticity ≥ 0.5
0 ≤ Emp Elasticity < 0.5
Emp Elasticity < 0 India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 19
4. Understanding
employment in
India’s services:
workers, workplaces
and conditions India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 20
Employment in India’s services sector is shaped by diverse demographic and structural factors
that determine who participates, where they work, and under what conditions. This chapter
disaggregates the services workforce by location, gender, age, education, type of employment,
and degree of informality. It also examines wages and earnings, providing a view of both the
inclusiveness and the quality of jobs in the sector. Together, these insights highlight the opportunities
and constraints that will shape the future role of services in India’s labour market.
4.1 Spatial Distribution: Urban concentration
India’s services sector clearly has a strong urban concentration. Data from the PLFS over 2017–18 to
2023–24 reveals a striking divergence between rural and urban labour markets, painting two very
different stories of growth and opportunity. (Figure 4.1).
Figure 4.1: Trend of location-wise & sector-wise distribution of employment
Source: PLFS (2017-18 to 2023-24)
Between 2017–18 and 2023–24, the share of services in rural employment declined from 19.9% to
18.9%. While the sector continues to provide jobs in rural areas, its growth has lagged behind other
sectors, leaving agriculture (59.8%) as the overwhelming source of rural livelihoods (Figure 4.1). In
urban areas, in contrast, the services share increased from 59.1% to 60.8% over the same period,
underscoring the sector’s centrality to urban labour markets, where it has consolidated its position
as the single largest source of employment. 4
Understanding employment in India’s
services: workers, workplaces and
conditions India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 21
The 2023–24 data highlight even sharper contrasts across space and gender (Figure 4.2).
Figure 4.2: Sectoral share of employment by location and gender (2023-24)
49.4
76.9
4.8
12.3
8.1
8.5
19.3
24.1
17.7
3.9
13.2
3.0
24.0
10.5
61.160.0
-20
10
40
70
100
MaleFemaleMaleFemale
RuralUrban
Sector-wise employment share %
Location and gender-wise distribution
Agriculture, forestry and fishing (A) Mining and quarrying (B)
Manufacturing (C)Utilities (D+E)
Construction (F)Services (G-U)
Source: PLFS (2023-24)
In rural areas, services accounted for 24% of male and just 10.5% of female employment, with
agriculture continuing to dominate women’s work (76.9%). In urban areas, services employed 61.1%
of men and 60% of women, making the sector equally important across genders. This divergence
illustrates fundamental structural differences in rural and urban employment systems.
To understand where the services employment lies, Figure 4.3 presents the distribution of
employment across major services sub-sectors by location for 2023–24, based on NIC-2008
industry groups. The composition of service employment also varies substantially.
In rural India, services are concentrated in a narrow set of activities: wholesale and retail trade (NIC
Group G), transport and storage (H), and education (P). These sub-sectors tend to be lower-value
and less skill-intensive, with limited potential for productivity gains. Urban services, in contrast,
display greater diversity. In addition to trade, transport, and education, cities host higher-value
segments such as information and communication (J), financial and insurance activities (K),
professional, scientific and technical services (M), and human health and social work activities (Q).
These sub-sectors absorb a larger share of the educated workforce, generate better wages, and
benefit from network effects and clustering. India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 22
Figure 4.3: Location-wise distribution of services sub-sectors (2023-24)
5
37.1
18.3
6.6
1.5
2.6
0.3
1.1
2.8
4.5
11.4
4.6
0.6
6.1
2.5
32.0
10.9
6.8
7.2
4.4
1.1
3.3
3.4
5.0
9.2
4.4
0.9
5.2
6.1
0
5
10
15
20
25
30
35
40
G H I J K L M N O P Q R S T
RuralUrban
Source: PLFS (2023-24)
A notable feature of India’s employment landscape is the reversal of sectoral dominance across
space. While agriculture continues to be the primary employer in rural regions, services fulfil this role
in urban economies. However, the expansion of service jobs in urban areas has not been uniformly
associated with improvements in job quality. Several sub-sectors, particularly trade, hospitality,
and parts of transport, have seen rising informality, with many workers employed without written
contracts or access to social security. As discussed in Section 4.6, informality remains a persistent
characteristic of India’s labour markets, even within cities where service employment is expanding
most rapidly.
Taken together, these trends point to a widening spatial segmentation of service employment. Urban
centres are consolidating their position as hubs for both traditional and modern services, while rural
economies remain heavily reliant on agriculture and a limited range of low-value services. Without
targeted policy measures, such as investments in digital and physical connectivity, the expansion
of skilling programmes, and the decentralised provision of education, health, and financial services,
the rural–urban divide in services employment will persist. This divide risks excluding large sections
of the rural workforce from participation in the most dynamic segments of India’s labour market.
Key Takeaways
• Services are urban-led: 61% of urban workers are in services, compared to just 19% in rural
areas (2023–24).
• Rural services are confined to trade, transport, and education, while urban services cover
a more diverse, higher-value set of activities such as finance, ICT and health.
• Spatial segmentation is deepening—without targeted interventions, rural India risks being
locked out of modern services.
5 G: Wholesale and retail trade; H: Transportation and storage; I: Accommodation and food; J: Information and communication; K: Financial
and insurance activities; L: Real estate activities; M: Professional, scientific and technical activities; N: Administrative and support service
activities; O: Public administration and defence; P: Education; Q: Human health and social work; R: Arts, entertainment and recreation; S:
Other service activities; T: Activities of households
% India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 23
4.2 Gender Participation: Women in urban services, rural gaps persist
Gender disparities in service employment remain substantial, shaped by both sectoral composition
and location.
Figure 4.4: Trend of gender-wise & sector-wise distribution of employment
Source: PLFS (2017-18 to 2023-24)
Between 2017–18 and 2023–24, male participation in services increased from 32.8% to 34.9%, while
female participation declined from 25.2% to 20.1% (Figure 4.4). Over the same period, agriculture
became increasingly female-dominated, with women’s share in agriculture rising from 57.0% to
64.4%, while men’s share fell from 40.2% to 36.3%. Construction moved in the opposite direction:
male participation rose from 13.7% to 16.4%, while women’s share contracted from 5.0% to 3.7%.
Manufacturing displayed the highest degree of parity, with near-equal representation in 2023–24
(11.4% men, 11.6% women). Mining and utilities remained male-dominated, although small in overall
employment share.
The 2023–24 cross-sectional picture highlights sharper contrasts across rural and urban labour
markets (Figure 4.5).
Sector-wise Employment share % India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 24
Figure 4.5: Sectoral share of employment by gender and location (2023-24)
49.4
4.8
76.9
12.3
8.1
19.3
8.5
24.1
17.7
13.2
3.9
3.0
24.0
61.1
10.5
60.0
0
20
40
60
80
100
RuralUrbanRuralUrban
MaleFemale
Sector-wise employment share %
Location and gender-wise distribution
Agriculture, forestry and fishing (A)Mining and quarrying (B)
Manufacturing (C)Utilities (D+E)
Construction (F)Services (G-U)
Source: PLFS (2023-24)
Rural men are spread across multiple sectors: agriculture (49.4%), construction (17.7%), services
(24%), and manufacturing (8.1%). Rural women, in contrast, remain overwhelmingly in agriculture
(76.9%), with limi ted presence in services (10.5%) or construction (3.9%). This pattern underscores
the narrow employment options available to rural women outside farming.
In urban areas, services dominate employment for both genders. Among men, 61% are employed
in services, with manufacturing (19.3%) and construction (13.2%) as secondary sources of jobs.
Among women, services are equally dominant (60%), followed by manufacturing (24.1%), while
construction remains marginal (3%). This suggests that while urban women have far greater access
to services than rural women, their sectoral spread remains narrower than that of men.
Figure 4.6: Service Sub-sector Category with Location and Gender distribution (2023-24)
6
38.9 36.5 37.6
30.6
19.1
24.0
23.1
14.3
18.6
7.5 5.4 6.4
25.9
20.3
22.7
13.3
8.4
10.5
7.1
18.2
13.5
0
20
40
60
80
100
rural urban rural + urban rural urban rural + urban
MaleFemale
Service Sub sectors (G-U)
Area and gender-wise distribution
G H I J K L M N O P Q R S T
Source: PLFS (2023-24)
6 G: Wholesale and retail trade; H: Transportation and storage; I: Accommodation and food; J: Information and communication; K: Financial
and insurance activities; L: Real estate activities; M: Professional, scientific and technical activities; N: Administrative and support service
activities; O: Public administration and defence; P: Education; Q: Human health and social work; R: Arts, entertainment and recreation; S:
Other service activities; T: Activities of households India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 25
A closer look at the services sector (Figure 4.6) reveals significant gender segmentation. Male
employment is distributed across a broad spectrum of sub-sectors, including wholesale and retail
trade (NIC Group G), transport (H), accommodation and food (I) public administration and defence
(O) and education (P). This distribution indicates greater occupational diversity and access to both
commercial and social services.
Female employment, in contrast, is concentrated in wholesale and retail trade (G), education (P),
and human health and social work (Q), and activities of the household (T) These three sub-sectors
account for the majority of women’s jobs in services, while their representation in transport (H),
finance and insurance (K), and professional and technical services (M) remains limited. This clustering
reflects women’s reliance on social and public services, particularly teaching and healthcare, which
provide more stable, salaried roles in urban areas. At the same time, it highlights continued barriers
preventing women from accessing high-growth, higher-paying segments such as ICT, finance, and
professional services. The result is a dual exclusion: rural women remain largely outside services,
while urban women are confined to a narrow set of service sub-sectors.
Key Takeaways
• Rural women remain largely excluded from the services sector, making up just 10.5% of
its workforce, less than half the share of rural men (24%).
• In urban areas, services employ around 60% of both men and women, but men enjoy a
broader spread across diverse sub-sectors.
• Women’s employment is heavily concentrated in social services like education, health,
and retail, with minimal representation in higher-value, fast-growing segments. India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 26
4.3 Employment type: Dominance of regular wage work and self-employment
Employment type offers a lens into job quality: distinguishing between secure wage work,
entrepreneurial activity, and casual labour. Services stand apart from agriculture and industry in
this regard, providing India’s most stable employment structure but still marked by deep internal
divides.
Figure 4.7: Sector-wise type of employment (2023-24)
7
46.3
8.4
40.0
17.7
13.5
38.3
35.7
1.7
7.8
2.0
0.7
6.6
0.9
64.4
43.4
74.8
5.2
51.0
17.0
25.6
8.8
5.6
80.6
4.1
0
20
40
60
80
100
Agriculture Mining &
quarrying
ManufacturingElectricity and
water supply
Construction Tertiary
Employment type
own account worker, employerhelper in household enterprise
regular wage/ salarycasual labour
Source: PLFS (2023-24)
In 2023–24 (Figure 4.7 & Table 4.1), over half of all service workers (96 million) were employed
in regular wage or salaried roles, the highest across sectors. This reflects the sector’s stronger
linkages to urban markets, institutional employers, and skill-based activities. Yet, self-employment
remains nearly as important, engaging 85 million workers (45%), many of whom operate as small
shopkeepers, drivers, or own-account service providers. Casual work, in contrast, is almost negligible
at 4%. This is in a sharp contrast to the industry, where nearly half of the workers are casual, and
agriculture, where informality dominates.
The contrast with agriculture is stark: more than four in five agricultural workers are self-employed,
largely as farmers or household helpers, while regular wage jobs are virtually absent. Industry
offers a mixed picture, with manufacturing generating some stable salaried jobs, but construction
overwhelmingly casualised, with over 60 million workers with little security.
7 Figure 4.7 uses 2-digit NIC division codes: 01-03 for Agriculture, 05-43 for Secondary sector (05-09 for mining & quarrying, 10-33 for
manufacturing, 35-39 for utilities like electricity and water supply, and 41-43 for construction), and 45-99 for tertiary sector. India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 27
Table 4.1: Number of workers by sector and sub-sector (in million)
SECTOR SUB-SECTOR
SELF-
EMPLOYED
(IN MN)
OWN
ACCOUNT (IN
MN)
HOUSEHOLD
HELPER
(IN MN)
REGULAR
WAGE/
SALARY
(IN MN)
CASUAL
LABOUR
(IN MN)
Agriculture (~292 mn) 239.0 135.0 104.0 3.0 50.0
Industry (~ 153 mn)46.0 40.0 6.0 39.0 68.0
Mining &
quarrying
(~1.5 mn)
0.10.1 0.00.90.4
Manufacturing
(~72 mn)
34.6 29.0 5.7 31.0 6.0
Electricity &
water supply
(~3.5 mn)
0.70.60.1 2.60.2
Construction
(~76 mn)
10.8 10.2 0.53.9 61.2
Services (~188 mn)84.6 72.1 12.4 967.7
Trade (~65
mn)
44.0 35.0 9.0 19.0 2.0
Transport (~27
mn)
14.6 14.4 0.29.53.0
Accommodation
& food
(~13 mn)
7.25.12.1 4.21.2
Other services
(~84 mn)
18.7 17.2 1.4 63.41.5
Source: PLFS (2023-24)
Within services, sub-sectoral variation is striking (Figure 4.8). Trade and transport remain dominated
by self-employment, reflecting low barriers to entry but also low earnings and insecurity. In
contrast, education, health, and public administration (other services
8
) are overwhelmingly salaried,
accounting for three-quarters of workers in these activities. Accommodation and food services
sit somewhere in between, offering a mix of formal wage roles in organised establishments and
informal, low-wage jobs in smaller units
.
8 Figure 4.8 uses 2-digit NIC division codes: 45-47 for Trade, 49-53 for Transport, 55-56 for Accommodation & Food, 58-99 for other
services. Other services here includes information & communication; financial & insurance activities; real estate activities; professional,
scientific & technical activities; administrative & support service activities; public administration & defence; education; human health &
social work activities; arts, entertainment & recreation; activities of household as employers undifferentiated goods and services produc-
ing activities of households for own use; activities of extraterritorial organisations and bodies. India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 28
Figure 4.8: Sub-sector-wise type of employment in the tertiary sector
54.4
53.1
40.5
20.6
13.5
0.6
16.5
1.7
29.1
35.0
33.5
75.8
3.0
11.3
9.5
1.8
0% 20% 40% 60% 80% 100%
trade
transport
accommodation & food services
other services
Employment type (%)
Services sub-sectors
Self employed own
account worker,
employer
Self employed,
helper in household
enterprise
regular
wage/ salary
casual
labour
Source: PLFS (2023-24)
These patterns reveal the contrasting character of service employment. On one hand, high-skill
segments like finance, IT, education, and healthcare—are expanding regular jobs, especially for
urban workers and women. On the other hand, large swathes of workers remain self-employed in
traditional services, vulnerable to fluctuating demand and lacking social protection.
The rise of regular wage work signals a gradual formalisation of services employment. But PLFS
data also shows that 40% of salaried workers lack written contracts, and over half are excluded
from benefits such as paid leave or social security.
For policy, the implication is clear: India’s service sector is generating jobs that are more secure
than those in agriculture and industry, but the quality gap within services is significant. Bridging this
divide by upgrading informal self-employment, strengthening protections for salaried workers, and
ensuring upward mobility across sub-sectors will be central to making services a genuine engine of
inclusive growth.
Key Takeaways
• Regular wage/salaried jobs and self-employment account for the majority in this
services sector.
• High-skill sectors offer regular jobs, but low-skill sub-sectors remain dominated by self-
employment.
• Duality in job types mirrors the sector’s structure: high-value services provide security,
while traditional services trap workers in vulnerability. India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 29
4.4 Age Profile: Dominance of prime-age workforce
Employment in India’s services sector is shaped not just by age, but by the type of work accessed at
each stage of the life cycle. In 2023–24, nearly 74% of service workers were in the 30-44 years age
group, making , making prime-age cohorts the engine of the sector (Figure 4.9). Within this group,
regular wage and salaried jobs dominate, peaking at age 30–39, when workers are most likely to
have completed their education and secured stable employment.
Figure 4.9: Percentage distribution of persons by usual status (ps+ss) for each age-group (Services Sector)
3.6
6.7
8.4
9.4
10.7
10.9
9.4
7.5
5.9
3.4
8.1
13.7
14.0
13.3
12.1
10.8
10.4
8.1
2.8
1.1
0
5
10
15
20
25
30
0-4
5-9
10-14
15-19
20-24
25-29
30-34
35-39
40-44
45-49
50-54
55-59
60 -64
65 & above
Employment type
Age groups
self-employed own-account worker, employer self-employed helper in household enterprises
regular wage/salariedcasual labour
30-44 prime-working age
%
Source: PLFS (2023-24)
Self-employment, in contrast, remains steady at around 9–12% across age groups, showing little
evidence of upward transition into regular wage roles. Instead of serving as a bridge into formal
work, self-employment coexists as a parallel track, concentrated in low-value activities such as
petty trade and small-scale services. This persistence reflects structural barriers, limited mobility,
skill mismatches, and exclusion from formal hiring that keep many workers locked into vulnerable
segments.
Casual labour plays only a marginal role, staying below 1% across all ages. This underscores
the relatively skill-intensive and institutionalised nature of services compared to agriculture or
construction, where casual work dominates.
The youth cohort (15–29 years) is underrepresented, pointing to barriers to entry into regular wage
work, insufficient skilling, poor job readiness, and weak school-to-work transitions. Meanwhile, the
share of older workers (45+) declines sharply, with regular wage jobs falling from 10% in the 55–59
group to just 1% beyond age 65. Only a small fraction continues in self-employment, highlighting
limited options for retention.
Taken together, these patterns show that the services sector is a prime-age, regular wage employer.
But it does not effectively integrate new entrants or retain older workers. Policy must therefore
focus on youth pipelines into formal services (apprenticeships, industry-linked skilling) and flexible,
age-friendly models for older workers to sustain engagement across the lifecycle. India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 30
Key Takeaways
• Services are firmly anchored in the prime-age workforce (30–44 years), making up a
hefty 74% of the workforce.
• Youth are underrepresented, highlighting barriers to entry.
• Older workers exit early, facing a lack of flexible work options to stay engaged.
• Regular wage work dominates in prime years, while self-employment continues to
persist, and casual labour plays a minimal role.
4.5 Educational Attainment: Job access and stratification
Education plays a decisive role in shaping access to jobs and the quality of work in India’s services
sector. The PLFS 2023–24 data shows a clear gradient: as educational attainment rises, workers
move into more stable, formal, and higher-paying roles. Yet, even among the highly educated,
underemployment and informality remain widespread, revealing a structural mismatch between
rising qualifications and the availability of quality jobs.
Figure 4.10: Percentage distribution of services sector workers for each high level of education completed
(2023-24)
1.8 3.2
6.8 7.0 7.6 9.0 9.9 9.5
1.5
2.5
5.8 7.6 9.0
23.7
24.8
37.9
0
20
40
60
not literate
literate & upto primary
middle
secondary
higher secondary
diploma/certificate course
graduate
post graduate & above
Employment type
Level of education sucessfully completed
Self-employed own account worker, employerSelf-employed helper in household enterprise
regular wage/ salarycasual labour
Source: PLFS (2023-24)
At the bottom of the spectrum (Figure 4.10), illiterate workers are almost entirely excluded from
salaried services jobs; only 1.5% manage to access such roles. With primary or secondary schooling,
opportunities improve slightly, but the real inflexion point comes at the graduate level, where nearly India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 31
a quarter (24.8%) secure regular wage jobs. For postgraduates, this figure rises to nearly 38%.
Education thus clearly increases access to secure, salaried roles. However, the flip side is equally
striking: almost two-thirds of postgraduates in services are not in stable salaried jobs, reflecting the
persistence of underemployment even at the highest levels of qualification.
Self-employment follows a nuanced pattern. Graduates record the highest share of self-employment
(nearly 10%), reflecting entrepreneurial aspirations but also a fallback for those unable to secure
salaried jobs. Postgraduates also show notable self-employment rates, but this is less about choice
and more about the lack of suitable opportunities in the formal labour market. Reports such as the
Economic Survey 2024–25 and India Skills Report 2025 highlight this gap: many educated workers
are either overqualified for their roles or lack the industry-relevant skills to match demand, forcing
them into informal or mismatched employment.
Casual labour, in contrast, declines steeply with education. Barely any graduates or postgraduates
remain in such roles, underscoring how education reduces reliance on low-wage, insecure work.
Similarly, household-based helping roles remain small and concentrated among workers with
limited schooling.
These patterns underscore that education clearly opens doors to better-quality jobs in services, but
the absence of adequate high-skill opportunities forces even degree holders into informality and
underemployment.
Figure 4.11: Average number of years in formal education for workers (ps+ss) with age (2023-24)
9
-1
1
3
5
7
9
11
13
15
G H I J K L M N O P Q R S T
Years in formal education
Services sub-sectors
15-29 years 15-59 years 15 years & above
Source: PLFS (2023-24)
9 G: Wholesale and retail trade; H: Transportation and storage; I: Accommodation and food; J: Information and communication; K: Financial
and insurance activities; L: Real estate activities; M: Professional, scientific and technical activities; N: Administrative and support service
activities; O: Public administration and defence; P: Education; Q: Human health and social work; R: Arts, entertainment and recreation; S:
Other service activities; T: Activities of households India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 32
Sectoral data (Figure 4.11) reinforces this: industries such as IT, finance, health, and education
demand higher years of schooling and offer relatively better outcomes, while trade, transport,
and accommodation remain dominated by less educated workers in informal or low-wage roles.
Generational patterns also point to gradual improvement, with workers aged 15–29 reporting higher
years of schooling than older cohorts, reflecting the cumulative expansion of education in India
over recent decades.
The implication is clear: India’s services sector is becoming increasingly educated, but job quality is
not keeping pace. Without timely alignment between skilling systems, higher education, and labour
market demand, the country risks missing the benefits of its demographic dividend through rising
educated underemployment.
Key Takeaways
• Services employ a rising share of educated workers, especially graduates.
• Yet, even among degree holders, informality and underemployment persist, pointing to
weak job quality.
• India faces a growing mismatch: education levels are rising faster than the quality of
service jobs, underscoring the urgency of aligning skilling with sector needs.
4.6 Informality: Limited access to social security benefits
Despite the centrality of services in India’s economic structure, the sector continues to be marked
by high levels of informality. As Sengupta (2009) observed, informality persists even in advanced
industries and corporate enterprises, with workers excluded from formal contracts, social protection,
and benefits. Following the definition adopted by Abraham and Kesar (2025), informal employment
includes casual labour, self-employed own-account workers, helpers in household enterprises, and
regular wage workers without any form of social security benefits.
Based on this definition, PLFS 2023–24 data shows that of India’s 634 million employed workers,
nearly 550 million (87%) are informally employed. Agriculture remains the largest source of
informality, employing about 290 million informal workers, predominantly own-account and
household-based workers. However, non-agricultural sectors also display significant informality.
Of the ~260 million informal workers outside agriculture, service, and industry contribute almost
equally (~130 million each). Figure 4.12 provides a more detailed breakup of informal and formal
employment across key sectors. India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 33
Figure 4.12: Informal and formal employment distribution in sectors (2023-24)
Source: Authors’ calculations based on PLFS (2023-24) India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 34
Figure 4.13: Informal employment distribution in the services sector (%) (2023-24)
55.7%
9.2%
29.0%
6.1%
Self-employed own account
Self-employed household helper
Regular wage
Casual labour
Source: PLFS (2023-24)
Within services, informality takes diverse forms. As shown in Figure 4.13, the largest share is self-
employed own-account workers (55.7%), followed by regular wage/salaried workers without
social protection (29%), helpers in household enterprises (9.2%), and casual labour (6.1%). This
pattern highlights the paradox of informality within salaried work: almost two in five regular service
workers lack basic social security coverage, underscoring the depth of “hidden informality” within
the sector.
Evidence from the Annual Survey of Unincorporated Sector Enterprises (ASUSE) reinforces this
picture (Box 2), showing that much of the services economy is composed of owner-driven and
family-based establishments with limited capacity for formalisation.
The implications are far-reaching. Informal jobs remain concentrated in sub-sectors such as trade,
transport, and hospitality, where workers face low wages, limited protections, and poor upward
mobility. As Thomas (2025) notes, this structure fails to meet the aspirations of India’s increasingly
educated youth. More broadly, the persistence of informality constrains household consumption,
dampens aggregate demand, and limits the services sector’s ability to act as a driver of inclusive
economic transformation. India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 35
Box 2: Informality in India’s Services Sector as captured by ASUSE Data (MoSPI)
The Annual Survey of Unincorporated Sector Enterprises (ASUSE), conducted by MoSPI, provides
critical insights into the structure and composition of India’s unincorporated non-agricultural
enterprises engaged in manufacturing, trade (wholesale and retail), and other services (excluding
construction). The survey spans three consecutive period: 2021–22, 2022–23, and 2023–24, with the
first based on an April–March reference year and the latter two aligned to an October–September
period, ensuring comparability across recent rounds.
ASUSE classifies workers into five distinct categories
10
: working owners, formal hired workers, informal
hired workers, unpaid family members, and other workers. The distribution of these categories
across sectors highlights the embedded informality characterising India’s unincorporated economy.
In 2023–24, working owners constituted the largest share of employment in all three major sectors,
i.e. services, trade, and manufacturing. In other services
11
, 59% of workers were working owners,
increasing from 56.3% in the previous year. Informally hired workers accounted for 28.3%, reducing
from 29.4% in the previous year. Unpaid family members and formally hired workers comprised
8.6% and 3.4%, respectively.
In trade, working owners made up 57.8% of the workforce (a decline from 58.2% in 2022-23), with
informal hired workers at 19.2% (an increase from 18.7% in 2022-23) and unpaid family members
(22.4%) comprising the remainder. Formally hired workers represented a negligible 0.4%.
Manufacturing showed similar patterns, with working owners at 60.2% (an increase from 58.9% in
2022-23) and informal hired workers at 25% (a decline from 27.2% in 2022-23).
Distribution of type of workers by sectors (% share)
58.9 60.2 58.2 57.8 56.3 59.0
0.50.40.60.44.53.4
27.2 25.5
18.7 19.2
29.4 28.3
13.1 13.7
22.3 22.4
9.28.6
0
20
40
60
80
100
2022-23 2023-24 2022-23 2023-24 2022-23 2023-24
ManufacturingTradeOther services
Working owners Formal hired workers Informal hired workers
Unpaid family member Other workers
Source: ASUSE 2023-24
Combining the trade and other services sectors allows clearer insights with respect to the services
sector as a whole. In 2023-24, 58.5% of the workers in the service sector were working owners, up
from 57.3% in 2022-23. Informal hired workers accounted for 24% (same as 2022-23), while unpaid
family workers made up 14.9% (a decline from 15.7% in 2022-23). Formally hired workers comprised
just 2% of the services sector, although higher than 0.4% in the manufacturing sector.
10 A formal hired worker is one who is eligible for paid leave and also eligible for social security benefits like provident fund, ESIC, health
insurance, etc. provided by the employer. An informal hired worker is not eligible for any of these benefits. Unpaid family members are
the ones who help in the entrepreneurial activity.
11 Services here includes food & accommodation, transport, warehouse & storage, information & communication, financial services, real
estate activities, professional scientific & technical activities, administrative & support sector activities, education, human health & social
work and other community, social & personal service activities India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 36
Distribution of type of workers by sectors (% share)
58.960.257.358.5
0.50.42.62.0
27.225.524.124.1
13.113.715.714.9
0
20
40
60
80
100
2022-232023-242022-232023-24
ManufacturingServices (incl trade)
Working owners Formal hired workers Informal hired workers
Unpaid family member Other workers
Source: ASUSE 2023-24
A sub-sectoral breakdown
12
of the other services sector reveals that working owners dominate
in areas such as real estate (95.3%), transport (92.4%), human health & social work (66.3%), and
information & communication (64.6%). In contrast, sectors such as warehousing and storage (66%),
education (53.9%), and support activities for transportation, postal & courier (52.4%) display a
greater dependence on informal hired workers.
Distribution of type of workers in the Other Services sector (% share)
41.3
92.4
28.5
37.7
64.6
55.5
95.3
53.9
28.1
66.3
35.0
6.3
66.1
52.4
23.4 25.0
2.9
33.7 53.9
23.7
0
20
40
60
80
100
Food &
accomodation
services
Transport
Warehouse &
storage
Support activities
for transportation,
postal &
courier activities
Information and
Communication
Financial services
Real estate
Professional
services
Education
Human health,
social work &
related activities
Working owners Formal hired workers Informal hired workers
Unpaid family member Other workers
Source: ASUSE 2023-24
These patterns illustrate the divergent nature of employment in India’s unincorporated services
sector: while some sub-sectors operate predominantly as owner-driven enterprises, others rely
heavily on informal labour. The findings reinforce the broader trend of pervasive informality in
service employment, even in segments where enterprise activity is expanding.
Source: Authors’ interpretation based on ASUSE data
12 Note: The constituents of the sub-sectors presented here may vary from the NIC or concordance based sub-sectors. India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 37
Key Takeaways
• Services remain overwhelmingly informal: the majority of workers lack access to job
security or social protection.
• Traditional sub-sectors like trade, transport, and hospitality dominate employment but
remain hotspots of informal work.
• Without formalisation, services risk becoming a low-wage trap despite being the fastest-
growing part of the economy.
4.7 Earnings inequality in India: Sectoral and gender dimensions
Earnings in India’s services sector highlight persistent inequalities shaped by gender, location, and
sectors. Although services offer higher average wages compared to agriculture or construction,
these gains remain concentrated in formal, urban, and skill-intensive segments, leaving large
pockets of workers, particularly women and rural workers, at the margins.
Rural-Urban Divide: Women bear the brunt of informal rural jobs
Figure 4.14 shows that casual workers in rural services earn significantly less than their urban
counterparts. Rural men earn on average ₹451 per day, compared to just ₹213 for women (a gap of
₹238), with women earning only 47% of male wages. This disparity is far sharper than in agriculture,
where women earn 75% of male wages, or manufacturing, where they earn 65%. The predominance
of informal and unskilled roles in rural services such as domestic work, retail, and personal care (see
Section 4.2) explains this imbalance. In contrast, in urban areas, men earn ₹480 per day and women
₹403, narrowing the wage ratio to 84%. This reflects the more diverse and formal nature of urban
services, particularly in healthcare, education, and public administration, which provide relatively
better-paying opportunities for women (WTO, 2019).
Figure 4.14: Average wage earnings (₹) per day from casual labour work (2023-24)
₹ 451
₹ 213
₹ 480
₹ 403
₹ 449
₹ 419
0
200
400
600
Male Female Male Female Male Female
RuralUrbanRural + Urban
Average wage earnings (₹)
Area and gender-wise distribution
Agriculture, forestry and fishing (A)Mining and quarrying (B)
Manufacturing (C)Utilities (D+E)
Construction (F)Services (G-U)
Source: PLFS (2023-24) India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 38
Gender gaps persist, but high-value sectors show pathways to parity
Even when rural and urban data are combined, male casual workers earn more (₹449 per day)
versus ₹419 for women (PLFS, 2023–24). On the surface, this ₹30 gap seems modest, but it masks
structural inequality. Women remain clustered in low-wage, low-skill segments, while men dominate
higher-paying roles across most sub-sectors. At the same time, there are important exceptions. In
Information and Communication (NIC Group J), urban women earn ₹2,000 per day compared to
₹729 for men, reflecting access to specialised, high-demand roles. Healthcare (Q) similarly shows
women earning more than men (₹542 vs. ₹480), and in education and public administration in rural
areas, female wages exceed male wages. These anomalies highlight spaces where service-sector
employment can create pathways to gender parity or even wage leadership (Figure 4.15).
Figure 4.15: Average wage earnings (₹) per day from casual labour work in the tertiary sector (2023-24)
13
0
200
400
600
800
1000
1200
1400
1600
1800
2000
Rural
Urban
Rural
Urban
Rural
Urban
Rural
Urban
Rural
Urban
Rural
Urban
Rural
Urban
Rural
Urban
Rural
Urban
Rural
Urban
Rural
Urban
Rural
Urban
Rural
Urban
Rural
Urban
Rural
Urban
G H I J K L M N O P Q R S T U
Male Female
Source: PLFS (2023-24)
Comparative Sectoral Patterns: Services lead in female employment, but wage gaps persist
across the board
Figure 4.16 situates these gaps in a cross-sectoral perspective. Female participation in rural services
is just 10.5% of the workforce, compared to 60% in urban areas. Yet it is precisely in rural services
where wage disparities are most severe: women earn less than half of men’s wages, compared
to more balanced ratios in agriculture and manufacturing. In urban areas, services stand out
as the largest employer of women (see Section 4.2), offering comparatively higher wages than
construction or utilities. However, even here, gender wage parity lags with urban women earning
84% of men’s wages in services, compared to 65% in manufacturing and 45% in utilities. This high
female participation but persistent inequality shows the services sector’s potential and its limitations.
13 G: Wholesale and retail trade; H: Transportation and storage; I: Accommodation and food; J: Information and communication; K: Financial
and insurance activities; L: Real estate activities; M: Professional, scientific and technical activities; N: Administrative and support service
activities; O: Public administration and defence; P: Education; Q: Human health and social work; R: Arts, entertainment and recreation; S:
Other service activities; T: Activities of households India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 39
Figure 4.16: Rural-urban wage gap and female labour force participation across sectors (2023-24)
Rural
Services (G-U)
Construction (F)
Utilities (D+E)
Manufacturing (C)
Mining and
quarrying (B)
Agriculture, forestry
and fishing (A)
0.0
0.2
0.4
0.6
0.8
-10 0 10 20 30 40 50 60 70 80
Proportion of female wage to male wage
Share of female workers
Urban
Agriculture, forestry and fishing (A)
Mining and
quarrying (B)
Manufacturing (C)
Utilities (D+E)
Construction (F)
Services (G-U)
0.0
0.2
0.4
0.6
0.8
1.0
0 10 20 30 40 50 60 70
Proportion of female wage to male wage
Share of female workers
Source: PLFS (2023-24) India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 40
The data reveals that services are increasingly central to women’s employment in India, particularly in
cities. It further highlights that wage gaps persist across most sub-sectors, shaped by occupational
segregation, limited access to high-paying positions, and skill mismatches. Expanding female
participation is therefore necessary but not sufficient; without addressing pay equity and enabling
women to move into high-value roles, service risk reproducing wider labour market inequalities
(Abraham and Kesar, 2025; PLFS, 2023–24).
Key Takeaways
• Rural services show the widest gender gap – women earn <50% of men’s wages, the
lowest parity across sectors.
• Urban services employ 60% women, but they still earn only 84% of male wages.
• ICT, healthcare, and education are outliers where women’s earnings match or exceed
men’s.
• Participation without pay equity risks entrenching inequality in India’s fastest-growing
sector. India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 41
5. Employment
patterns across
sub-sectors and
regions India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 42
India’s services employment is marked by strong regional and sub-sectoral variations. Some states
have developed vibrant hubs in high-value services such as ICT, finance, and healthcare, while others
remain concentrated in low-productivity, traditional activities like trade, transport, and education.
Similarly, sub-sectoral employment is divided between modern, globally competitive services that
employ relatively few workers and traditional services that dominate in numbers but are largely
informal and low-wage. These patterns highlight the dual character of service employment and
the need for differentiated strategies that address both regional disparities and the contrasting
trajectories of modern and traditional services.
5.1 Major Sub-sectors by employment and responsiveness
The composition of employment within India’s services sector reveals both continuity and structural
change. Using the concordance classification developed by NITI Aayog (Pant et al., 2024), detailed
in Annexure 1, the data shows that between 2011–12 and 2023–24, large traditional services sub-
sectors continued to absorb the bulk of employment, while high-value modern services grew
quickly but from a much smaller base.
Traditional anchors dominate the labour market
As shown in Table 5.1, Trade & Repair remains the single largest employer, with workers rising from
49 million workers in 2011–12 to nearly 68 million in 2023–24. Alongside, Transport (26.4 million)
and Education (19.2 million) have steadily expanded their workforce. Together, the top seven sub-
sectors—Trade & Repair, Transport, Education, Travel, Professional & Business Services (including
R&D and real estate), Government n.i.e., and Personal & Recreational Services—account for over
80% of total service employment (~155 million workers) (Figure 5.1). These sub-sectors cater to
both rural and urban labour markets, with trade and transport providing mass employment and
education and professional services concentrating in urban centres (see Section 4.1).
Modern services are gaining ground but remain limited in scale
Computer & Information Services more than tripled their employment from 2.1 million in 2011–12
to 7.2 million in 2023–24, while Financial Services grew to 6 million workers. Health services
also expanded sharply to 8.5 million, supported by post-COVID investments. These sub-sectors
represent India’s most dynamic areas of growth, characterised by higher productivity, better wages,
and stronger links to global value chains. Yet, even combined, they employ fewer than 25 million
workers, far smaller than trade alone.
Lagging and shrinking segments point to structural churn
Telecommunications lost nearly half a million workers between 2011–12 and 2023–24, while
Insurance & Pension Services also shed jobs. Postal & Courier Services and Audiovisual Services
show stagnation (Figure 5.2). These contractions reflect technological disruption, automation, and
changing consumer behaviour. Their decline underscores the challenge of worker displacement in
segments where output has grown but employment intensity has weakened.5
Employment patterns across sub-sectors
and regions India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 43
Table 5.1: Number of workers in service sub-sectors (concordance group, in millions)
High Low
Sub-sectors 2011-122017-182018-19
2019-
20
2020-
21
2021-22
2022-
23
2023-
24
Worker
added
btw 2011-
12 and
2023-24
Trade & Repair 49.0 50.4 55.1 64.7 65.3 60.9 62.7 67.8 18.8
Transport 19.5 22.8 23.4 24.3 24.5 23.6 23.6 26.4 6.9
Education 14.7 18.0 19.1 19 19.2 16.6 18.1 19.2 4.5
Travel8.1 9.0 9.1 9.2 9.3 9.9 10.9 12.6 4.5
Professional,
scientific &
other business
services
(including R&D
and Real Estate)
7.0 10.6 10.6 10.6 10.7 10.7 10.2 11.5 4.5
Government
n.i.e.
8.2 7.7 8.1 8.3 8.3 8.5 8.2 9.0 0.8
Personal,
cultural &
Recreational
services
8.8 8.1 9.4 7.9 8.0 8.9 8.7 9.0 0.2
Health4.5 5.8 6.4 6.1 6.2 7.2 7.3 8.5 4.0
Others4.1 5.2 6.0 3.5 3.5 7.0 7.0 8.3 4.2
Computer &
Information
services
2.1 3.0 3.3 3.8 3.8 5.7 6.5 7.2 5.1
Financial
Services
3.5 4.3 5.1 4.8 4.8 5.2 4.8 6.0 2.5
Postal & Courier 0.7 0.7 0.8 0.8 0.8 1.0 0.7 0.8 0.1
AV & related
services
0.5 0.7 0.6 0.7 0.7 1.0 0.5 0.8 0.3
Telecommunications
1.1 1.0 1.0 0.8 0.8 0.7 0.7 0.6 -0.5
Insurance &
Pension Services
0.9 0.7 0.8 0.8 0.8 0.7 0.7 0.6 -0.3
Note: Colour gradient from green to red indicates relative employment size across sub-sectors for each year (green = higher
employment, red = lower employment).
Source: Calculations based on MoSPI 68th Round, PLFS (2017-18 to 2023-24) India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 44
Figure 5.1: Top sectors in the services sector employment in India
36.9
34.1
34.7
39.2
39.2
36.3
36.7
36.0
14.7
15.4
14.7
14.7
14.7
14.1
13.8
14.0
11.1
12.2 12.0
11.5 11.5
9.9 10.6 10.2
6.1 6.1 5.7
5.6 5.6
5.9 6.4 6.7
5.3 7.2 6.7
6.4 6.4
6.4 6.0 6.1
6.2 5.2 5.1
5.0 5.0
5.1 4.8 4.8
6.6 5.5 5.9
4.8 4.8
5.3 5.1 4.8
0
20
40
60
80
100
2011-12
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
2023-24
Sub-sector-wise share in services employment
(%)
Trade & RepairTransport
EducationTravel
Professional, scientific & other business servicesGovernment n.i.e.
Personal, cultural & Recreational services
Source: Calculations based on MoSPI 68th Round, PLFS (2017-18 to 2023-24)
Figure 5.2: Bottom sectors in the services sector employment in India
3.4
3.9
4.0
3.7
3.7
4.3
4.3
4.5
3.1
3.5
3.8
2.1
2.1
4.2
4.1
4.4
1.6
2.0
2.1
2.3
2.3
3.4
3.8
3.8
2.6
2.9
3.2
2.9
2.9
3.1
2.8
3.2
0
4
8
12
16
20
2011-12
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
2023-24
Sub-sector-wise share in services employment
(%)
HealthOthersComputer & Information services
Financial ServicesPostal & CourierAV & related services
TelecommunicationsInsurance & Pension Services
Source: Calculations based on MoSPI 68th Round, PLFS (2017-18 to 2023-24)
Elasticity patterns reinforce the dualism
As Table 5.2 shows, employment elasticity is highest in Computer & Information Services (0.79),
Health (0.74), and Financial Services (0.74), with post-COVID surges in digital and healthcare jobs.
Transport (0.53) and Trade & Repair (0.39) also absorb labour at scale, albeit with lower productivity.
In contrast, sub-sectors such as Telecommunications (-0.79) and Insurance (-1.31) report persistently
negative elasticities, reflecting capital-intensive growth that displaces rather than creates jobs. India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 45
Table 5.2: Sub-sector wise employment elasticity using CAGR approach
SUB-SECTOR
PRE-COVID
(2011–12 TO
2019–20)
POST-COVID
(2021–22 TO
2023–24)
OVERALL
(2011–12 TO
2023–24)
Computer & information services0.520.880.79
Health0.480.940.74
Financial services0.620.950.74
Professional, scientific & other business services (incl.
R&D and real estate)
0.730.350.62
Transport0.460.890.53
Travel0.240.290.54
Trade & repair0.360.630.39
Education0.390.740.29
Audiovisual & related services0.19-1.940.30
Postal & courier services0.37-1.730.17
Government n.i.e.0.010.660.17
Personal, cultural & recreational services-0.180.060.06
Telecommunications-0.67-0.76-0.79
Insurance & pension services-0.38-0.95-1.31
Source: Calculations based on MoSPI 68th Round, PLFS (2017-18 to 2023-24), NAS 2025 MoSPI
Figure 5.3 maps these dynamics, showing that sectors like health, ICT, finance, and transport
combine high elasticity with growing employment shares, positioning them as critical engines of
future job creation. Meanwhile, large employers such as trade and education demonstrate only
moderate responsiveness, suggesting their capacity to create new jobs is slowing.
The evidence thus points to a structural imbalance: India’s services employment is still dominated
by low-value, traditional activities, while high-value services, though fast-growing, have not yet
scaled enough to transform the labour market. Bridging this divide will require deliberate policy
support to accelerate the transition of workers from traditional to modern sub-sectors through
skilling, digital infrastructure, and service cluster development.
The sub-sectoral employment trends as per NIC-2008 Industry groups have been placed in
Annexure 2. Despite minor differences in terminology, the overlap suggests a strong alignment
between both classification systems in identifying the most prominent sectors. India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 46
Figure 5.3: Sub-sector elasticity with sub sector share in GVA and services Employment (2023-24)
Computer &
Information services
Health
Financial Services
Professional,
scientific & other
business services
(including R&D, real
estate)
Transport
Travel
Trade & Repair
Education
AV & related services
Government n.i.e.
Postal & Courier
Personal, cultural &
Recreational services
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
-5%0%5%10%15% 20%25%
Sub sector share in Services Employment
Sub sector share in services GVA
Note: Bubble size represents sub-sectoral employment elasticity, calculated using CAGR approach (2011-12 to 2023-24);
Telecommunications and Insurance & Pension have been excluded from the graph as they report negative elasticity of -0.79 and
-1.31 respectively from 2011-12 to 2023-24.
Source: PLFS (2023-24) & NAS 2025 MoSPI
Key Takeaways
• Employment is concentrated in traditional services: trade, transport, education, and
accommodation together account for over two-thirds of services jobs.
• High-value services (ICT, finance, professional services, healthcare) contribute significantly
to GVA but employ relatively few workers.
• The services sector shows a structural imbalance: job creation is driven by low-value
activities, while productivity gains are concentrated in high-value segments.
• Policy must aim to shift workers from low-value to high-value services through skilling,
digital access, and cluster development.
Emp Elasticity ≥ 0.5
0 ≤ Emp Elasticity < 0.5
Emp Elasticity < 0 India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 47
5.2 State-wise services employment shares and trends
Services employment in India varies significantly across states and UTs, reflecting differences in
economic structure, urbanisation, and sectoral diversification. Table 5.3 provides state-wise shares
of persons usually employed in services from 2011–12 to 2023–24. Figures 5.4 and 5.5 highlight
employment shares and absolute numbers, respectively in 2023–24.
Urbanised UTs/States with high shares, limited scale
Chandigarh (77.9%), Delhi (71.0%), Goa (59.1%), and Puducherry (59.6%) remain the most service-
oriented economies. These shares have been consistently high since 2011–12, reflecting their urban
nature and dependence on professional services, public administration, and tourism (see Section
5.3). However, due to small population bases, absolute employment is limited (e.g., Chandigarh 0.4
million, Goa 0.3 million).
Large states drive absolute employment
Uttar Pradesh has the largest number of service workers (22.1 million in 2023–24), despite a relatively
low share (22.7%). Maharashtra follows closely with 21.5 million workers (36.2%), supported by its
large urban base. West Bengal (15.7 million, 32.5%), Tamil Nadu (13.5 million, 37.9%), and Gujarat
(10.5 million, 30.2%) also make major contributions. These cases show that population scale often
outweighs sectoral intensity in determining workforce size.
Southern states with stronger participation
Kerala (48.5%, 7.5 million) and Andhra Pradesh (31.8%, 7.8 million) display strong reliance on
services, driven by healthcare, education, and trade (see Section 5.3). Karnataka and Telangana,
despite being global IT hubs, employ only around one-third of their workforce in services (~33–
34%), underscoring a productivity-driven model where output grows faster than jobs.
States with relatively lower services intensity
Bihar (22.2%), Madhya Pradesh (19.7%), Chhattisgarh (19.1%), and Odisha (25.0%) record services
shares below the national average of 29.7% in 2023–24. In these states, agriculture and industry
continue to provide a larger share of employment, moderating the shift towards services.
Mixed outcomes in the North-East
Mizoram (49.6%) and Nagaland (43.1%) report higher-than-average services shares, while others
such as Sikkim (43.8%) and Arunachal Pradesh (26.2%) are closer to the national mean. Yet absolute
numbers remain very small (typically under 0.3 million) reflecting limited population size. India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 48
Table 5.3: Share of usually working persons (ps+ss) in services sector for each State/ UT (arranged in
descending order for the year 2023-24)
High Low
State/UT2011-12 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24
Chandigarh76.6 76.3 83.0 79.0 83.4 73.7 83.8 77.9
Delhi73.8 66.2 69.6 71.9 72.0 65.4 66.9 71.0
Puducherry50.2 55.4 51.1 54.1 49.0 54.6 56.0 59.6
Goa65.5 61.5 65.4 60.8 64.0 66.0 58.8 59.1
Lakshadweep47.6 58.2 48.2 56.6 57.5 59.1 50.8 54.7
A & N Islands50.2 60.4 61.6 54.6 51.8 47.1 52.3 51.2
Mizoram34.0 42.7 44.6 44.7 47.2 47.0 45.7 49.6
Kerala42.6 48.8 47.3 47.3 44.6 45.7 45.6 48.5
Ladakh#N/A** #N/A #N/A 39.3 45.7 37.7 34.3 44.4
Sikkim25.9 43.0 44.5 43.0 44.1 42.5 39.2 43.8
Nagaland31.9 54.9 50.9 42.1 46.0 41.7 37.9 43.1
Haryana29.4 38.8 40.3 37.5 37.8 38.3 40.4 42.7
Punjab32.0 40.9 40.0 42.4 38.5 37.2 41.1 40.8
Tamil Nadu31.0 37.3 38.3 36.8 35.9 34.1 35.2 37.9
Maharashtra31.9 34.2 36.1 34.3 32.1 36.1 34.2 36.2
Telangana#N/A* 34.0 33.9 33.3 33.2 28.7 33.0 34.8
Manipur30.0 44.2 49.9 46.7 48.5 42.8 38.0 34.4
West Bengal29.4 33.4 35.2 36.2 32.5 34.9 34.8 33.4
Uttarakhand28.9 37.5 38.8 30.9 35.4 36.4 31.4 33.1
Karnataka31.0 33.2 37.6 33.7 33.0 33.2 33.9 32.9
Andhra Pradesh27.7 29.5 33.2 31.0 33.0 32.0 33.3 31.8
Tripura26.0 49.7 49.5 36.5 37.0 40.7 40.7 31.4
Jammu & Kashmir27.6 33.4 35.3 33.9 31.0 30.9 28.8 31.3
Assam30.7 37.5 37.1 41.6 38.3 34.2 18.5 30.1
all India26.9 31.0 32.4 30.8 29.6 29.7 28.9 29.7
Meghalaya31.6 30.3 33.2 29.1 38.5 35.2 31.5 28.6
Gujarat24.8 30.2 30.1 28.7 28.8 27.2 26.4 28.2
Arunachal Pradesh25.0 43.6 46.0 36.8 36.1 31.8 28.6 26.2
Odisha21.6 24.8 26.4 24.8 24.7 27.3 26.1 25.0
Rajasthan19.9 24.4 25.6 22.1 21.9 22.9 20.7 24.6
Himachal Pradesh18.9 22.3 23.3 21.4 23.1 22.9 24.4 24.0
Uttar Pradesh21.2 25.9 25.3 24.0 23.4 23.0 23.0 22.7
Bihar21.6 29.5 28.4 27.0 26.1 26.3 26.0 22.2
Jharkhand21.6 24.1 24.9 22.2 20.0 21.4 23.2 21.6
Madhya Pradesh20.3 20.8 22.6 21.5 20.6 19.9 21.9 19.7
Dadra & Nagar Haveli
& Daman & Diu
49.1 52.3 45.7 42.7 23.2 19.9 24.3 19.2
Chhattisgarh14.5 17.2 19.6 18.0 18.3 18.6 18.8 19.1
* Formed in 2014, hence data not available for 2011-12
**Ladakh became a Union Territory of India on October 31, 2019, following the passage of the Jammu and Kashmir
Reorganisation Act. Hence data not available for 2011-12
Note: Colour gradient from green to red indicates relative services employment share across states for each year (green =
higher employment, red = lower employment).
Source: MoSPI 68th Round, PLFS (2017-18 to 2023-24) India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 49
Figure 5.4: Share in service sector Employment (%)
in 2023-24
Figure 5.5: Number of usually working population in
service sector (in millions)
W.
W.
Source: PLFS (2023-24)Source: Authors’ calculations based on PLFS (2023-24)
As Figures 5.4 and 5.5 illustrate, absolute employment numbers closely track state population
sizes, even where services shares differ. For example, Rajasthan (9.6 million) and Madhya Pradesh
(9.2 million) contribute large workforces despite relatively low shares, while smaller states like Goa
and Chandigarh record high shares but employ fewer than one million workers.
Services employment is unevenly distributed across India’s states. Urbanised UTs are heavily
services-oriented but small in scale; populous states dominate in absolute numbers regardless of
share; southern states combine higher participation with sectoral depth; while several large states
remain more agriculture- and industry-dependent. This divergence between scale and intensity
underscores the importance of state-specific strategies to expand services employment in line with
regional strengths and constraints (as attempted in Annexure 4). India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 50
Box 3: Employment share in services sector and per capita income
An analysis of the relationship between services employment and income levels has been done using data from the
PLFS for the seven-year period spanning 2017–18 to 2023–24. While the available PLFS data for this period largely
comprises estimates which limits the scope for rigorous econometric analysis, a correlation approach has been adopted
to explore broad trends between employment patterns and income growth across Indian states.
The correlation analysis conducted across 20 select states
14
reveals a positive correlation coefficient of 0.51 between the
share of employment in services and log per capita income. This suggests that states with higher income levels tend to
exhibit a greater proportion of their workforce engaged in services. The relationship reflects the well-established linkage
between income growth, rising consumption of services, and corresponding employment expansion in the tertiary
sector.
The results are further supported by recent findings from the Household Consumption Expenditure Survey (HCES)
2023-24, which confirm an increase in the share of services in household consumption expenditure with rising income.
As incomes rise, households tend to allocate a greater proportion of spending to services such as health, education,
transport, communication, and recreation, reinforcing the employment-generating role of services.
This empirical finding aligns with the broader economic theory of structural transformation. As income levels rise,
economies tend to experience a shift in consumption patterns toward services, prompting an accompanying shift in
employment structures (Herrendorf, Rogerson, & Valentinyi, 2014). The observed trend in India’s context reinforces this
theoretical expectation, highlighting that the growth of services employment is closely tied to rising per capita income
and the associated increase in demand for services.
As Basole (2022) argues, structural change and economic growth must advance together to meaningfully improve
employment outcomes and working conditions. While growth can stimulate labour demand, without sustained
improvements in the employment intensity of growth, structural transformation may remain incomplete. The Indian
experience reflects this complexity, with positive correlations observed, but continued challenges in translating growth
into formal, high-quality employment in the services sector.
Correlation between Service sector employment share and per capita income
(2017-18 to 2023-24)
Source: Authors’ calculation based on PLFS data (2017–18 to 2023–24)
14 20 select states include: Andhra Pradesh (AP), Assam (ASM), Bihar (BR), Chhattisgarh (CG), Gujarat (GJ), Haryana (HR), Himachal
Pradesh (HP), Jharkhand (JH), Karnataka (KA), Kerala (KL), Madhya Pradesh (MP), Maharashtra (MH), Odisha (OR), Punjab (PB), Rajas-
than (RJ), Tamil Nadu (TN), Telangana (TG), Uttar Pradesh (UP), Uttarakhand (UK) and West Bengal (WB).
Note: Delhi and Chandigarh are outliers and thus have been excluded from the analysis. India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 51
Key Takeaways
• Services employment is uneven across states, shaped by population scale and economic
structure.
• Urbanised UTs report high shares but small absolute numbers.
• Large states dominate in workforce size, even with modest services shares.
• Southern states show stronger participation, though models differ (labour-intensive vs.
productivity-driven).
• Several states remain agriculture- and industry-dependent, slowing the services shift.
• North-Eastern states show mixed patterns with limited scale.
• State-specific strategies are essential to align services employment with regional
strengths. India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 52
5.3 Comparative dynamics across states and sub-sectors: 2011–12 vs 2023–24
The composition of services employment has shifted unevenly across states and sub-sectors over
the past decade. Figure 5.6
15
highlights the leading states in each services sub-sector in 2011–12
and 2023–24, while Figure 5.7 maps their workforce size, share, and contribution to GSVA. Taken
together, these figures trace the evolving nature of state-level specialisation, revealing parallel
trends of concentration and divergence in India’s services economy. This uses services industry
groups based on NIC-2008 classification (details in Annexure 3).
Traditional sub-sectors: scale-driven dominance
Figure 5.6 shows that populous states such as Uttar Pradesh, Bihar, and West Bengal continue to
dominate employment in retail trade and transport, both in 2011–12 and 2023–24. These sub-sectors
remain the backbone of services employment, absorbing large numbers of workers but offering
limited productivity and wage growth.
Modern sub-sectors: concentrated hubs
In contrast, IT, professional, and financial services are increasingly concentrated in southern and
western states. Karnataka and Telangana have consolidated leadership in IT and information
services, while Maharashtra and Tamil Nadu dominate in finance and professional services. These
sub-sectors are high-value and skill-intensive, generating significant GSVA but employing a smaller
share of the workforce.
Education, health, and public administration: stabilisers
Education and health services are more prominent in states such as Kerala, Himachal Pradesh,
and the North-East, reflecting demand for social services and the influence of public-sector
employment. Public administration and defence remain significant in Jammu & Kashmir and several
North-Eastern states, highlighting the centrality of government jobs in smaller economies.
15 Shows the share of a particular services sub-sector in each state’s services employment share. Includes analysis of 20 select states (same
as the states incorporated in box 3). Delhi and Chandigarh are outliers and thus have been excluded from the analysis.
India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 53
Figure 5.6: Share of leading state across service sub-sectors (2011-12 vs 2023-24)
TOP STATES
% SHARE
Assam
45.7
Jharkhand
45.7
Bihar
41.9
Uttar Pradesh
40.8
Gujarat
40.2
Madhya Pradesh
39.5
Uttarakhand
39.2
Odisha
37.8
Rajasthan
35.7
Chhattisgarh
34.0
TOP STATES
% SHARE
Kerala
18.8
Andhra Pradesh
18.4
Uttarakhand
17.5
Himachal Pradesh
17.3
Rajasthan
16.4
West Bengal
16.1
Tamil Nadu
16.1
Jharkhand
16.0
Odisha
15.6
Gujarat
15.3
TOP STATES
% SHARE
Karnataka
9.6
Uttarakhand
9.4
Tamil Nadu
9.2
Gujarat
7.6
Odisha
7.4
Bihar
7.1
Kerala
6.9
Himachal Pradesh
6.8
Chhattisgarh
5.9
Maharashtra
5.4
TOP STATES
% SHARE
Karnataka
8.0
Haryana
5.0
Tamil Nadu
4.6
Maharashtra
4.0
Andhra Pradesh
3.8
Kerala
2.7
Punjab
1.9
West Bengal
1.8
Odisha
1.8
Madhya Pradesh
1.7
TOP STATES
% SHARE
Uttarakhand
16.8
Tamil Nadu
8.5
Andhra Pradesh
8.4
Kerala
8.3
Jharkhand
8.2
Madhya Pradesh
7.9
Rajasthan
7.7
Karnataka
7.6
Odisha
7.3
TOP STATES
% SHARE
Karnataka
12.7
Telangana
12.0
Maharashtra
9.0
Tamil Nadu
8.3
Haryana
5.4
Andhra Pradesh
5.0
Kerala
4.8
Uttarakhand
3.0
West Bengal
2.6
Rajasthan
2.4
TOP STATES
% SHARE
Bihar
46.9
Uttar Pradesh
44.0
Assam
41.7
Madhya Pradesh
39.7
Jharkhand
38.7
Odisha
36.4
Gujarat
35.4
Rajasthan
34.9
West Bengal
34.7
Chhattisgarh
34.1
TOP STATES
% SHARE
Assam
18.8
Bihar
16.4
Himachal Pradesh
16.4
Tamil Nadu
16.3
Odisha
16.3
Telangana
16.1
Andhra Pradesh
15.7
West Bengal
15.3
Rajasthan
15.1
Services sub-
sectors
Wholesale &
retail trade
Transportation &
storage
Accommodation
& food
Information &
communication
2011-12 2023-24 India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 54
TOP STATES
% SHARE
Maharashtra
5.5
Tamil Nadu
5.0
Kerala
4.6
Punjab
3.7
Himachal Pradesh
3.6
Haryana
3.5
Madhya Pradesh
3.4
West Bengal
3.3
Karnataka
3.2
TOP STATES
% SHARE
Haryana
2.2
Tamil Nadu
1.3
Punjab
1.2
Maharashtra
1.1
Rajasthan
1.0
Karnataka
0.9
Kerala
0.8
Andhra Pradesh
0.7
Jharkhand
0.6
TOP STATES
% SHARE
Karnataka
3.4
Himachal Pradesh
3.1
Rajasthan
2.8
Maharashtra
2.4
Haryana
2.3
Uttar Pradesh
2.3
Gujarat
2.2
Jharkhand
2.1
West Bengal
2.0
TOP STATES
% SHARE
Karnataka
3.4
Jharkhand
3.1
Maharashtra
3.0
Tamil Nadu
2.8
Rajasthan
2.8
Kerala
2.7
West Bengal
2.7
Gujarat
2.4
Andhra Pradesh
2.3
TOP STATES
% SHARE
Maharashtra
5.6
Kerala
5.4
Telangana
4.9
Tamil Nadu
4.4
Gujarat
4.3
Karnataka
4.3
Punjab
3.4
Madhya Pradesh
3.2
Rajasthan
3.1
Andhra Pradesh
3.1
TOP STATES
% SHARE
Karnataka
1.6
Telangana
1.3
Tamil Nadu
1.0
Haryana
0.9
Gujarat
0.8
Maharashtra
0.8
Himachal Pradesh
0.7
Punjab
0.7
Andhra Pradesh
0.7
West Bengal
0.7
TOP STATES
% SHARE
Haryana
3.8
Maharashtra
3.5
Gujarat
3.3
Rajasthan
3.3
Punjab
3.3
Kerala
3.2
Uttar Pradesh
2.3
Tamil Nadu
2.1
Odisha
2.1
Karnataka
1.9
TOP STATES
% SHARE
Gujarat
5.3
Odisha
5.0
Maharashtra
4.4
Kerala
3.8
West Bengal
3.5
Rajasthan
3.1
Uttarakhand
3.1
Karnataka
2.9
Jharkhand
2.9
Uttar Pradesh
2.7
Services sub-
sectors
Financial &
insurance
Real estate
Professional,
scientific &
technical
Administrative
2011-12 2023-24 India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 55
TOP STATES
% SHARE
Himachal Pradesh
10.2
Haryana
8.9
Madhya Pradesh
8.7
Gujarat
6.9
Andhra Pradesh
6.9
Maharashtra
6.2
Assam
6.0
Uttarakhand
5.8
Odisha
5.7
Punjab
5.6
TOP STATES
% SHARE
Himachal Pradesh
23.9
Chhattisgarh
17.9
Rajasthan
15.0
Haryana
14.4
Uttarakhand
14.0
West Bengal
13.1
Odisha
13.0
Madhya Pradesh
12.9
Punjab
12.4
Bihar
12.4
TOP STATES
% SHARE
Chhattisgarh
8.9
Kerala
6.6
Punjab
5.6
Haryana
4.5
Gujarat
4.1
Maharashtra
3.5
Rajasthan
3.4
Andhra Pradesh
3.3
Uttar Pradesh
3.2
West Bengal
3.2
TOP STATES
% SHARE
Odisha
1.5
Karnataka
1.5
Kerala
1.2
Chhattisgarh
1.2
Himachal Pradesh
1.2
Uttar Pradesh
1.0
Maharashtra
0.8
Madhya Pradesh
0.8
West Bengal
0.7
Tamil Nadu
0.7
TOP STATES
% SHARE
Himachal Pradesh
11.4
Haryana
8.8
Andhra Pradesh
7.2
Chhattisgarh
6.7
Madhya Pradesh
6.3
Telangana
5.9
Karnataka
4.7
Maharashtra
4.5
Kerala
4.5
Punjab
4.3
TOP STATES
% SHARE
Himachal Pradesh
21.2
Uttarakhand
18.2
Chhattisgarh
14.6
Assam
13.0
Haryana
12.2
Odisha
12.1
Jharkhand
11.6
Bihar
11.3
Rajasthan
11.1
Madhya Pradesh
11.1
TOP STATES
% SHARE
Chhattisgarh
9.7
Kerala
7.2
Andhra Pradesh
5.8
Gujarat
5.7
Punjab
5.6
Jharkhand
5.4
Haryana
5.4
Maharashtra
5.1
Madhya Pradesh
5.0
Rajasthan
4.7
TOP STATES
% SHARE
Kerala
1.8
Rajasthan
1.4
Punjab
1.2
Madhya Pradesh
1.0
Maharashtra
0.9
West Bengal
0.8
Uttar Pradesh
0.8
Andhra Pradesh
0.8
Chhattisgarh
0.7
Odisha
0.7
Services sub-
sectors
Public admin &
defence
Education
Human health &
social work
Arts,
entertainment &
recreation
2011-12
2023-24 India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 56
TOP STATES
% SHARE
Punjab
14.3
Bihar
13.0
Uttar Pradesh
11.4
Odisha
9.6
Andhra Pradesh
8.9
Madhya Pradesh
8.7
Tamil Nadu
8.4
Rajasthan
8.0
Chhattisgarh
7.8
Assam
7.3
TOP STATES
% SHARE
Assam
8.7
West Bengal
7.5
Maharashtra
5.7
Tamil Nadu
3.5
Karnataka
3.3
Andhra Pradesh
3.0
Chhattisgarh
2.8
Kerala
2.7
Gujarat
1.9
Jharkhand
1.7
TOP STATES
% SHARE
Punjab
9.9
Gujarat
7.8
Bihar
7.3
Andhra Pradesh
6.9
Uttar Pradesh
6.8
Chhattisgarh
6.4
Uttarakhand
6.2
Rajasthan
6.0
Odisha
5.8
Telangana
5.7
TOP STATES
% SHARE
West Bengal
8.8
Punjab
8.3
Maharashtra
6.0
Jharkhand
4.7
Telangana
4.5
Tamil Nadu
4.5
Gujarat
4.4
Kerala
4.2
Chhattisgarh
3.8
Karnataka
3.6
Services sub-
sectors
Other services
Activities of households
2011-12 2023-24 India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 57
State-wise distribution of services sector employment: Share (%) vs Workforce size (Mn), 2023-24
Figure 5.7 underscores the divergence: populous states employ millions of workers in traditional
services with limited productivity, while a few southern and western hubs dominate modern, skill-
intensive sub-sectors with high value-add but fewer jobs. This dual-track structure highlights the
uneven pathways through which services contribute to both employment and growth.
Figure 5.7: State-wise Distribution of Services Sector Employment: Share (%) vs Workforce Size (Million),
2023–24
AP
Assam
Bihar
Chhattisgarh
Gujarat
Haryana
HP
Jharkhand
Karnataka
Kerala
MP
Maharashtra
Odisha
Punjab
Rajasthan
TN
Telangana
UP
Uttarakhand
WB
Delhi
Chandigarh
-2
3
8
13
18
23
0 10 20 30 40 50 60 70 80 90
Workers (million)
Share of services employment %
Note: Bubble size represents share of service sector in state’s GSVA
Source: PLFS (2023-24) and NAS 2025 MoSPI
Key Takeaways
• Retail trade and transport dominate services jobs in large states, sustaining employment
but at low productivity levels.
• Modern services (IT, finance, professional services) are booming in southern and
western hubs, driving growth but absorbing fewer workers.
• Education, health, and public administration provide stable employment in smaller and
public-sector-dependent states.
• India’s services sector reflects a dual-track model: traditional sub-sectors drive
employment scale, while modern sub-sectors fuel productivity and wage growth. India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 58
India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 59
6. Policy Unlocks India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 60
The analysis in the report highlights that while India’s services sector has become an increasingly
central driver of economic output, its employment outcomes remain uneven. Persistent challenges
such as rural–urban divides, gender gaps, educational mismatches, informality, and regional
disparities limit the sector’s inclusiveness. At the same time, emerging opportunities linked to
technology, demographic shifts, and global megatrends provide a chance to reshape services
employment into a more resilient and broad-based engine of growth.
A coherent policy approach is therefore required, combining supply-side measures on skilling and
inclusion with demand-side interventions that stimulate job-rich services growth. Accordingly, this
report proposes four major unlocks that are detailed below:
a. Accelerating formalisation and job security
b. Bridging gender and rural gaps
c. Leveraging technology and global megatrends
d. Fostering balanced regional growth
These four unlocks form the framework for the recommendations presented below.
6.1 Unlock 1: Accelerating Formalisation and Job Security
a. Basic standards for all jobs: Introduce and implement minimum employment standards
(contracts, leave, social security) across formal and informal service providers.
b. Gig/platform worker safeguards: Ensure fair pay, grievance redressal, and safety nets for
platform workers in delivery, transport, domestic help, and other services.
c. Digital inclusion for informal workers: Register informal workers (especially women) to skill
development programmes, work platforms, and social entitlements via mobile-accessible
portals.
d. Portable social security access: Ensure informal workers have digital, portable welfare IDs
to enable continuity of benefits.
e. Formalisation of household-based services: Develop guidelines and frameworks for
regularising domestic work, elderly care, and personal services.6
Policy Unlocks India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 61
6.2 Unlock 2: Bridging Gender and Rural Gaps
6.2.1 Inclusive Rural and Urban Services Employment
a. Strengthen rural services hubs: Develop rural hubs with healthcare, education, logistics,
and connectivity to generate employment beyond agriculture.
b. Diversify non-farm rural employment: Promote rural healthcare, digital services, local
tourism, and climate-resilient green services.
c. Enhance rural women’s participation: Integrate skilling and entrepreneurship programmes
targeted at women, linked to local market development.
d. Expand service growth corridors: Develop services clusters around mid-sized cities to
reduce migration pressure on metros.
e. Improve urban worker infrastructure: Ensure safe transport, accommodation, and affordable
housing for urban service workers.
f. Support youth-driven urban entrepreneurship: Enable young entrepreneurs to start
businesses in IT, creative industries, and retail services.
g. Next-generation services in smaller cities: Promote AI- and tech-based service ecosystems
outside major metros.
6.2.2 Gender Equality and Workforce Diversity
a. Education-to-skilling pathways for women: Expand access to STEM, financial literacy, and
mentoring for girls to strengthen pipelines into formal services jobs.
b. Gender-responsive skilling: Train women in high-demand sectors such as healthcare,
education, and IT.
c. Address care and safety constraints: Improve childcare, flexible work arrangements, and
safe transport for women.
d. Reduce gender wage gaps: Enforce equal pay and encourage female leadership in
workplaces.
e. Equal Pay Certification: Recognise service enterprises with verified gender parity in pay
and opportunities.
f. Strengthen women-led urban enterprises: Facilitate mentorship, workspace access, and
market linkages for women entrepreneurs. India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 62
6.3 Unlock 3: Leveraging Technology and Global Megatrends
a. Youth innovation for emerging priorities: Encourage innovation in climate tech, digital
governance, AI, and health services.
b. Modern apprenticeships in services: Institutionalise apprenticeships in logistics, design,
ITeS, and wellness for workers aged 30–44.
c. Career-aligned incubation support: Establish urban incubation networks with mentoring,
peer learning, and self-employment pathways.
d. Stronger school-to-work pipelines: Build formal career pathways from secondary/
vocational education to services jobs through industry-aligned curriculum and career fairs.
e. Align education with services skilling: Focus on high-employment elasticity sub-sectors
(IT, finance, healthcare) and integrate skilling with education through AEDPC, embedded
degrees, and apprenticeship-linked higher education.
f. Strengthen industry-skills linkages: Align training programmes with employer needs in
both formal and informal segments.
g. Enable lifelong learning: Promote blended learning, MOOCs, and flexible certification for
working professionals.
h. Early vocational exposure: Expand school-level vocational education with links to ITIs and
local employers.
i. Accelerate large-scale reskilling and upskilling: Focus on mid-career professionals at risk
of automation.
6.4 Unlock 4: Fostering Balanced Regional Growth
6.4.1 Addressing Regional Disparities
a. State-specific employment blueprints: Encourage states to develop strategies aligned to
demographic strengths.
b. Invest in smaller cities: Promote urbanisation and planning in Tier 2/3 cities to anchor
service growth outside metros and reduce migration pressures.
c. Emerging sectors in lagging regions: Focus on green services, wellness tourism, digital
education, and back-office operations.
d. Detailed state-specific action plans: Annexure 4 provides nuanced recommendations for
22 states/UTs. India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 63
6.4.2 Linking Services Employment to Broader Growth
a. Stimulate demand for key services: Promote universal access and quality in public services
(healthcare, education, IT) to generate downstream employment.
b. Anchor employment in service exports: Expand international market access for tourism,
healthcare, IT, and education services.
Table 6.1: Summary of key findings and associated recommendations
UNLOCKCORE RECOMMENDATIONSEXPECTED IMPACT
UNLOCK 1:
Accelerating
formalisation and job
security
• Ensure minimum job standards (contracts, leave, social
security) across services.
• Safeguard gig/platform workers through fair pay, grievance
redress, and safety nets.
• Digital registration of informal workers with portable social
security IDs.
• Formalise household-based and care services.
Reduced informality;
improved job quality
and security; expanded
social protection
coverage.
UNLOCK 2:
Bridging gender and
rural gaps
• Develop rural service hubs; diversify into healthcare, digital,
tourism, and green services.
• Expand mid-sized city service corridors to decongest
metros.
• Strengthen women’s skilling (STEM, healthcare, IT), childcare
and safe mobility.
• Enforce equal pay and promote women’s leadership.
Non-farm rural
jobs; higher female
participation; reduced
rural–urban and gender
divides.
UNLOCK 3:
Leveraging
technology and
global megatrends
• Promote youth-led innovation in AI, climate tech, health, and
digital governance.
• Institutionalise modern apprenticeships and incubation
support in high-growth sub-sectors.
• Align higher education with industry needs (embedded
degrees, AEDPC).
• Enable lifelong learning via blended and flexible skilling
models.
Harness demographic
dividend; future-ready
workforce; innovation-
driven service growth.
UNLOCK 4:
Fostering balanced
regional growth
• State-specific employment blueprints aligned to
demographic strengths.
• Invest in Tier 2/3 cities and lagging regions.
• Promote emerging service sectors in green economy,
wellness tourism, and digital education.
• Stimulate demand for public services and expand service
exports.
Balanced regional
growth; reduced
migration pressures;
integration into global
value chains.
A more inclusive and employment-rich services sector may be realised through coordinated
efforts across supply- and demand-side levers. Strengthening skills, improving job quality, enabling
inclusion, and sectoral diversification could be central to this effort. As India continues its structural
transformation, the services sector is likely to emerge as a key driver of equitable and sustainable
employment growth, provided its employment potential is strategically unlocked. India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 64
Key Takeaways
• Formalisation first: Fast-track social protection and simplify compliance for MSMEs and
gig/platform work.
• Gender & rural inclusion: Enable women and rural youth to access modern service jobs
via targeted skilling and digital infrastructure.
• Technology-led skilling: Future-proof the workforce with training tailored for AI, digital,
and green economy needs.
• Balanced regional strategy: Build service clusters beyond metros through connectivity,
logistics, and institutional support. India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 65
7. Conclusion India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 66
7. Conclusion
India’s services sector has reached a decisive moment. It already employs nearly 188 million workers,
contributes more than half of national GVA, and has proven itself to be resilient during crises such
as the COVID-19 pandemic. Yet, its employment footprint reveals a striking paradox: while services
absorb one-third of India’s workforce, most jobs are concentrated in traditional, low-productivity
segments such as trade and transport, where informality and vulnerability dominate. High-value
services like IT, finance, healthcare, professional services create disproportionate economic value,
but employ relatively few workers.
This dual character of India’s services economy highlights the core challenge for the next two
decades: to convert the sector’s dynamism into broad-based, high-quality employment. The
evidence shows that services have the capacity to deliver with employment elasticity rising to 0.63
post-COVID, making the sector a key shock absorber. However, without structural reforms, these
potential risks being squandered in a cycle of low-quality job expansion.
India’s demographic and regional realities amplify this urgency. The services workforce is
dominated by prime-age workers (30–44 years), offering stability but also underscoring the need
for continuous reskilling to keep them employable in a fast-changing technological environment.
Women, especially in rural areas, remain the most under-utilised labour pool: only 10.5% of rural
women are employed in services, compared to 60% in urban areas. Meanwhile, geographic
divergence persists with—states such as Maharashtra, Tamil Nadu, and Uttar Pradesh balance
scale and value, but others such as Bihar, Madhya Pradesh, and Gujarat host large numbers of low-
productivity jobs, while knowledge hubs like Karnataka and Telangana generate high GVA with
limited employment. These imbalances represent both constraints and opportunities.
The global environment adds another layer of complexity. Services employment will be reshaped
by megatrends: digitalisation, artificial intelligence, the green transition, and cross-border trade in
services. These shifts could create millions of new opportunities in digital health, fintech, climate
services, logistics, and global outsourcing. But they also risk deepening informality and exclusion if
India’s workforce is not adequately skilled and protected.
To harness the sector’s potential, India must pursue a deliberate strategy that goes beyond
expanding numbers to transforming the quality, inclusiveness, and resilience of services jobs.
Four priorities are critical:
1. Address Formalisation and Job Security
India must break the cycle of informal services work. Expanding social security coverage,
designing simplified compliance for small firms, strengthening gig and platform worker
protections, and integrating workers into financial systems will ensure that jobs deliver security
alongside livelihoods.
2. Bridge Gender and Rural Gaps
Closing the participation gap of women, especially in rural areas, is not just an equity imperative
but a growth strategy. Policies that provide safe transport, affordable childcare, flexible work
models, and digital access can enable millions of women to move into high-growth services.
Similarly, expanding rural service economies through better connectivity, e-commerce, and
digital skilling can spread opportunities beyond urban enclaves.7
Conclusion India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 67
3. Leverage Technology and Global Megatrends
AI and digitalisation will disrupt routine service jobs but also create demand for new skill sets.
India must scale up adaptive skilling systems, link training directly to emerging industry needs,
and ensure access for both urban graduates and rural youth. At the same time, India should
position itself as a global hub for emerging service models—from climate adaptation services
to health-tech and digital finance.
4. Foster Balanced Regional Growth
Service opportunities must not be confined to metros and a handful of states. Developing
second-tier service hubs, enhancing physical and digital infrastructure, incentivising state-level
reforms, and creating regional service clusters will help spread growth more equitably and
unlock underutilised productivity potential.
If these priorities are pursued with focus and ambition, India’s services sector can shift from being
a safety net of low-value jobs to a springboard for opportunity, equity, and resilience. The sector
will not just accompany growth but it will drive it, by creating employment that is productive,
secure, and future-ready. India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 68
India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 69
References India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 70
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Insights from Employment Trends and State Level Dynamics 72
India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 73
Annexures India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 74
Annexures
Annexure 1
Heuristic Concordance Table
16
CATEGORYEMPLOYMENT
Trade & repair
Division 45: Wholesale and retail trade and repair of motor vehicles and
motorcycles
Division 46: Wholesale trade, except of motor vehicles and motorcycles
Division 47: Retail trade, except of motor vehicles and motorcycles
Division 95: Repair of computers and personal and household goods
Computer & information
services
Division 62: Computer programming, consultancy and related activities
Division 63: Information service activities
Government n.i.e. Division 84: Public administration and defence; compulsory social security
Financial services
Division 64: Financial service activities, except insurance and pension funding
Division 66: Other financial activities
Others
Division 97: Activities of households as employers of domestic personnel
Division 98: Undifferentiated goods and services producing activities of
private households for own use
Division 99: Activities of extraterritorial organisations and bodies
EducationDivision 85: Education
Health
Division 86: Human health activities
Division 87: Residential care activities
Division 88: Social work activities without accommodation
Personal, cultural &
recreational services
Division 90: Creative, arts and entertainment activities
Division 91: Libraries, archives, museums and other cultural activities
Division 92: Gambling and betting activities
Division 93: Sports activities and amusement and recreation activities
Division 94: Activities of membership organisations
Division 96: Other personal service activities
Telecommunications Division 61: Telecommunications
Travel
Division 55: Accommodation
Division 56 Food and beverage service activities
Insurance & pension
services
Division 65: Insurance, reinsurance and pension funding, except compulsory
social security
16 Based on NIC 2008 classification and concordance drawn from Pant et. Al (2024) India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 75
CATEGORYEMPLOYMENT
Professional, scientific
& other business
services (including R&D
and real estate)
Division 68: Real estate activities
Division 69: Legal and accounting activities
Division 70: Activities of head offices; management consultancy activities
Division 71: Architecture and engineering activities; technical testing and
analysis
Division 72: Scientific research and development
Division 73: Advertising and market research
Division 74: Other professional, scientific and technical activities
Division 75: Veterinary activities
Division 77: Rental and leasing activities
Division 78: Employment activities
Division 79: Travel agency, tour operator and other reservation service
activities
Division 80: Security and investigation activities
Division 81: Services to buildings and landscape activities
Division 82: Office administrative, office support and other business support
activities
Postal & courier Division 53: Postal and courier activities
AV & related services
Division 58: Publishing activities
Division 59: Motion picture, video and television programme production,
sound recording and music publishing activities
Division 60: Broadcasting and programming activities
Transport
Division 49: Land transport and transport via pipelines
Division 50: Water transport
Division 51: Air transport
Division 52: Warehousing and support activities for transportation India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 76
Annexure 2
Sub-sectoral Employment by NIC-2008 Industry Groups
This section explores sub-sectoral trends by analysing employment patterns across various service
categories using the NIC 2008 industry classification. The analysis reveals that employment is
primarily concentrated in a few dominant industries, including trade and repair, transport, education,
travel, and professional services. In contrast, smaller and more specialised industries, such as cultural
and recreational services, as well as financial, insurance, and pension services continue to exhibit
limited potential for employment generation.
It highlights the top and bottom performing services industry groups within the NIC 2008 (G to
U) classification, encompassing a broad spectrum of economic activities, including wholesale and
retail trade, transportation, accommodation, among other services.
Table A2.1: G to U Industry Groups as per NIC 2008 classification
17
High Low
2011-12 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24
G 34.7 32.5 33.2 37.4 35.6 34.9 35.3 34.4
H 15.2 15.9 15.3 15.1 14.8 14.6 14.3 14.4
I 6.1 6.0 5.7 5.6 5.7 5.9 6.4 6.7
J 2.9 3.2 3.1 3.1 3.4 4.3 4.5 4.5
K 3.4 3.4 3.6 3.5 3.5 3.5 3.2 3.5
L 0.7 0.7 0.6 0.6 0.6 0.7 0.7 0.7
M 2.1 2.7 2.7 2.5 2.4 2.2 2.1 2.3
N 2.4 3.8 3.4 3.4 3.1 3.5 3.2 3.1
O 6.2 5.2 5.1 5.0 5.1 5.1 4.8 4.8
P 11.1 12.2 12.0 11.5 10.4 9.9 10.5 10.2
Q 3.4 3.9 4.0 3.7 4.6 4.3 4.3 4.5
R 0.8 0.9 1.0 0.9 0.6 0.8 0.8 0.7
S 7.9 6.2 6.5 5.7 6.4 5.9 5.8 5.6
T 3.1 3.5 3.8 2.1 3.7 4.2 4.1 4.4
U 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Note: Colour gradient from green to red indicates relative employment shares across sub-sectors for each year (green = higher
employment, red = lower employment).
Source: MoSPI 68th Round, PLFS (2017-18 to 2023-24)
17 G: Wholesale and retail trade; H: Transportation and storage; I: Accommodation and food; J: Information and communication; K: Financial
and insurance activities; L: Real estate activities; M: Professional, scientific and technical activities; N: Administrative and support service
activities; O: Public administration and defence; P: Education; Q: Human health and social work; R: Arts, entertainment and recreation; S:
Other service activities; T: Activities of households India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 77
Figure A2.1: Employment shares of top services industry groups (per NIC 2008)
18
34.7 32.5 33.2
37.4 35.6 34.9 35.3 34.4
15.2
15.9 15.3
15.1
14.8 14.6 14.3 14.4
11.1 12.2 12.0
11.5
10.4
9.9 10.5 10.2
0
20
40
60
80
100
2011-12
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
2023-24
Sub-sector-wise share in services employment %
G H P I S O J
Source: MoSPI 68th Round, PLFS (2017-18 to 2023-24)
In terms of employment share within India’s services sector, the top seven industry groups
contribute around 80-85% of the total services sector employment, reflecting their central role
in the economy. These industries include Wholesale and Retail Trade; Repair of Motor Vehicles
and Motorcycles (G), Transportation and Storage (H), Education (P), Accommodation and Food
Service Activities (I), Other Service Activities (S), Public Administration and Defence (O), and
Information and Communication (J). These sectors have seen steady growth and continue to
absorb a significant portion of the workforce. Wholesale and retail trade, driven by consumption
and urbanisation, remains the largest employer. Meanwhile, Transportation, boosted by logistics
and infrastructure developments, and Education, fuelled by increasing demand for skilled workers,
also account for significant shares. Accommodation and Food Service Activities and Information
and Communication have seen robust growth, particularly due to the rise of digital services and the
expansion of hospitality-related industries.
On the other hand, the bottom industry groups represent a much smaller fraction of employment,
contributing collectively less than 20% of the total services sector employment in 2023-24. These sectors
include Human Health and Social Work Activities (Q), Activities of Households as Employers (T), Financial
and Insurance Activities (K), Administrative and Support Service Activities (N), Professional, Scientific, and
Technical Activities (M), Real Estate Activities (L), Arts, Entertainment, and Recreation (R), and Activities
of Extraterritorial Organisations and Bodies (U). While there has been some growth in sectors like Human
Health and Professional Activities, these industries remain niche contributors to employment. Administrative
Services, Financial Services, and Real Estate show a gradual increase but still employ a limited share of
the workforce. The Arts and Entertainment sector, along with Extraterrestrial Organisations, consistently
contributes a minimal share, reflecting their specialised and smaller scale within the economy.
18 G: Wholesale and retail trade; H: Transportation and storage; I: Accommodation and food; J: Information and communication; K: Financial
and insurance activities; L: Real estate activities; M: Professional, scientific and technical activities; N: Administrative and support service
activities; O: Public administration and defence; P: Education; Q: Human health and social work; R: Arts, entertainment and recreation; S:
Other service activities; T: Activities of households India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 78
Figure A2.2: Employment shares of bottom services industry groups (per NIC 2008)
19
3.4 3.9 4.0 3.7
4.6 4.3 4.3 4.5
3.1
3.5
3.8
2.1
3.7 4.2 4.1
4.4
3.4
3.4
3.6
3.5
3.5
3.5
3.2
3.5
2.4
3.8
3.4
3.4
3.1
3.5
3.2
3.1
2.1
2.7 2.7
2.5
2.4
2.2
2.1
2.3
0
5
10
15
20
25
2011-12
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
2023-24
Sub-sector-wise share in services employment %
Q T K N M L R
Source: MoSPI 68th Round, PLFS (2017-18 to 2023-24)
Overall, the disparity in employment shares between the top and bottom industry groups highlights a
critical aspect of India’s services sector, where the majority of employment is concentrated in a handful
of dominant, labour-intensive industries, while smaller, specialised industries continue to have limited but
steady employment generation potential. The shift towards more diversified and specialised sectors in the
coming years will likely be pivotal for ensuring broader employment opportunities and economic growth.
Finally, a comparison of top sectors identified through the concordance approach (section 5.1) with
those classified under NIC 2008, it is evident that the key sectors remain largely consistent across
both frameworks. The concordance-based sectors namely, Trade & Repair, Transport, Education,
Travel, Professional, Scientific & Other Business Services (including R&D and real estate), Government
n.i.e., and Health broadly align with NIC sectors such as Wholesale and Retail Trade; Repair of Motor
Vehicles and Motorcycles (G), Transportation and Storage (H), Education (P), Accommodation and
Food Service Activities (I), Other Service Activities (S), Public Administration and Defence (O), and
Information and Communication (J). Despite minor differences in terminology, the overlap suggests
a strong alignment between both classification systems in identifying the most prominent sectors.
19 G: Wholesale and retail trade; H: Transportation and storage; I: Accommodation and food; J: Information and communication; K: Financial
and insurance activities; L: Real estate activities; M: Professional, scientific and technical activities; N: Administrative and support service
activities; O: Public administration and defence; P: Education; Q: Human health and social work; R: Arts, entertainment and recreation; S:
Other service activities; T: Activities of households India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 79
Annexure 3
Sub-sector share in each state’s services employment share in 2023-24
20
STATE UT G H I J K L M N O P Q R S T
Andhra
Pradesh
31.415.78.4 5.0 3.1 0.7 1.3 1.5 7.2 8.6 5.8 0.8 6.9 3.6
Arunachal
Pradesh
36.8 8.9 1.5 1.3 1.4 0.4 1.8 0.0 19.819.65.2 0.0 1.7 1.7
Assam 41.718.86.4 0.9 1.4 0.2 0.8 2.7 3.8 13.03.8 0.5 3.9 2.2
Bihar 46.916.44.4 1.7 2.1 0.1 0.6 2.0 1.8 11.32.1 0.3 7.3 2.9
Chhattisgarh 34.110.06.8 0.9 2.9 0.4 1.2 1.6 6.7 14.69.7 0.7 6.4 3.8
Delhi 28.9 11.25.3 4.3 6.3 1.8 4.2 5.7 5.0 5.8 3.1 1.0 5.8 11.6
Goa 28.812.018.6 1.1 2.1 3.8 2.8 1.9 6.710.44.2 0.5 1.2 5.9
Gujarat 35.414.34.5 1.7 4.3 0.8 3.3 5.3 4.0 8.1 5.7 0.5 7.8 4.4
Haryana 30.113.65.9 5.4 2.9 0.9 3.8 2.5 8.8 12.25.4 0.6 5.0 2.9
Himachal
Pradesh
28.316.45.4 1.6 2.9 0.7 1.1 1.111.421.23.2 0.5 4.7 1.6
Jharkhand 38.714.88.2 1.4 2.1 0.6 1.8 2.9 2.5 11.65.4 0.3 4.9 4.7
Karnataka 29.514.17.6 12.74.3 1.6 1.9 2.9 4.7 9.3 4.6 0.2 2.9 3.6
Kerala 31.812.08.3 4.8 5.4 0.5 3.2 3.8 4.5 8.9 7.2 1.8 3.7 4.2
Madhya
Pradesh
39.713.57.9 1.2 3.2 0.6 1.3 1.4 6.3 11.15.0 1.0 5.2 2.6
Maharashtra 27.813.16.7 9.0 5.6 0.8 3.5 4.4 4.5 7.9 5.1 0.9 4.8 6.0
Manipur 27.29.4 3.0 0.7 2.8 0.0 1.5 7.120.019.75.3 0.2 1.6 1.5
Meghalaya 26.015.49.2 0.5 1.0 0.3 1.0 4.5 9.5 16.77.5 1.5 3.6 3.3
Mizoram 36.013.03.9 0.4 0.9 0.0 1.2 8.3 14.717.52.2 0.1 1.8 0.1
Nagaland 22.915.6 1.0 0.4 1.0 0.4 1.012.57.623.4 4.4 0.0 8.8 0.8
Odisha 36.416.37.3 0.9 2.8 0.2 2.1 5.0 3.8 12.14.1 0.7 5.8 2.5
Punjab 33.011.04.7 1.7 3.4 0.7 3.3 1.9 4.3 10.95.6 1.2 9.9 8.3
Rajasthan 34.9 15.17.7 2.4 3.1 0.6 3.3 3.1 3.9 11.14.7 1.4 6.0 2.8
Sikkim 17.919.88.9 0.1 0.4 0.0 0.7 1.631.811.24.9 0.7 1.3 0.7
20 G: Wholesale and retail trade; H: Transportation and storage; I: Accommodation and food; J: Information and communication; K: Financial
and insurance activities; L: Real estate activities; M: Professional, scientific and technical activities; N: Administrative and support service
activities; O: Public administration and defence; P: Education; Q: Human health and social work; R: Arts, entertainment and recreation; S:
Other service activities; T: Activities of households India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 80
STATE UT G H I J K L M N O P Q R S T
Tamil Nadu 29.616.38.5 8.3 4.4 1.0 2.1 2.4 4.2 9.5 3.8 0.6 4.8 4.5
Telangana 28.216.15.0 12.04.9 1.3 1.6 1.15.9 9.3 4.3 0.3 5.7 4.5
Tripura 38.113.84.9 0.3 1.3 0.0 1.6 3.5 8.8 17.82.6 0.3 2.8 4.0
Uttarakhand 28.311.316.83.0 2.0 0.4 1.4 3.1 3.5 18.24.0 0.1 6.2 1.7
Uttar
Pradesh
44.013.56.3 2.0 2.2 0.6 2.3 2.7 4.1 9.7 3.0 0.8 6.8 2.0
West Bengal 34.715.36.3 2.6 2.5 0.7 1.6 3.5 3.4 10.44.0 0.8 5.6 8.8
A & N Island 21.315.6 8.1 1.1 1.2 0.3 1.2 6.2 23.1 8.1 5.8 0.7 3.0 4.5
Chandigarh 21.86.8 6.0 11.98.2 1.2 4.8 1.014.06.3 5.7 0.7 3.6 8.1
Dadra &
Nagar Haveli
& Daman &
Diu
23.220.5 9.2 0.0 3.9 0.0 5.9 1.0 11.77.3 8.3 0.9 4.6 3.5
Jammu &
Kashmir
30.614.34.9 1.5 3.1 0.4 1.2 1.4 13.118.84.4 0.4 4.9 0.9
Ladakh 25.620.7 8.2 0.0 1.6 0.0 0.0 1.220.317.80.8 0.0 3.8 0.0
Lakshadweep 13.124.312.00.0 1.8 0.0 2.3 0.0 31.17.1 5.2 0.9 2.2 0.0
Puducherry 21.414.48.6 8.5 5.5 0.0 2.1 6.9 7.2 8.7 7.8 0.3 3.2 5.3
All India 34.414.4 6.7 4.5 3.5 0.7 2.3 3.1 4.8 10.24.5 0.7 5.6 4.4 India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 81
Annexure 4
21
State Profiles and Recommendations
Each state possesses unique characteristics that shape its economic profile and employment
landscape. Annexure 4 provides a detailed breakdown of the sectoral and sub-sectoral contributions
of each of the 22 major states/UTs mentioned in the report and presents tailored recommendations
to enhance employment opportunities by leveraging the specific advantages and potential of each
state.
Andhra Pradesh
Sectoral Employment in
Andhra Pradesh
• As of 2023-24, 31.8% of
the state’s workforce
(~7.8 million workers) is
engaged in the services
sector, a rise from 27.7% in
2011-12. This also exceeds
the national average of
29.7%. Services sector employment shares (2023-24)
Rural 21.7%
Urban 61.4%
Male 35.6%
Female 25.6%
Suggestions for expanding
employment opportunities
• Establish global academic
partnerships and R&D
hubs in centres like
Amaravati to drive
innovation and develop
talent across sectors.
• Expand employment in
port logistics, IT services,
and food processing
support services in
Visakhapatnam and
Vijayawada.
• Promote digital skilling
for rural youth in coastal
districts.
Sub-sector
Employment share in
2023-24 (%)
Wholesale & retail trade31.4
Transportation & storage15.7
Education8.6
Accommodation & food8.4
Public admin & defence7.2
Other services6.9
Human health & social work5.8
Information & communication5.0
Activities of households3.6
Financial & insurance3.1
Administrative1.5
Professional & scientific1.3
Arts, entertainment &
recreation
0.8
Real estate0.7
Source: PLFS (2023-24)
21 Note: Rural, urban, male and female percentages represent the proportion of workers employed in the services sector within each of
these categories for the given state. Sub-sector data denotes the share of each sub-sector in services employment within a particular state.
Agriculture , 46.3
Mining &
quarrying , 0.5Manufacturing , 9.6
Utilities , 0.4
Construction , 11.4
Services , 31.8 India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 82
Assam
Sectoral Employment in
Assam
• As of 2023-24, 30.1%
of Assam’s workforce
(~5.1 million workers) is
employed in the services
sector, a slight decline
from 30.7% in 2011-12.
Nevertheless, this remains
marginally above the
national average of 29.7%.Services sector employment shares (2023-24)
Rural 25.8%
Urban 71.0%
Male 39.0%
Female 15.1%
Suggestions for expanding
employment opportunities
• Encourage more cultural
events like the Metropolis
Urban Winter Festival and
develop creative hubs for
arts, crafts and media,
thereby promoting local
culture and generating
jobs in event management,
hospitality and the creative
sector.
• Leverage tourism and
eco-based services in
Kaziranga, Majuli for rural
youth employment.
• Expedite the development
of Multi-Modal Logistics
Park at Dibrugarh
to enhance regional
connectivity and reduce
logistics costs.
Sub-sector
Employment share in
2023-24 (%)
Wholesale & retail trade41.7
Transportation & storage18.8
Education13.0
Accommodation & food6.4
Other services3.9
Public admin & defence3.8
Human health & social work 3.8
Administrative 2.7
Activities of households 2.2
Financial & insurance 1.4
Information & communication 0.9
Professional & scientific 0.8
Arts, entertainment &
recreation
0.5
Real estate 0.2
Source: PLFS (2023-24)
Agriculture , 47.2
Mining &
quarrying , 0.2
Manufacturing , 9.3
Utilities , 0.3
Construction ,
13.0
Services , 30.1 India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 83
Bihar
Sectoral Employment in Bihar
• Services sector
employment stood at
22.2% (~10.2 million
workers) in Bihar in 2023-
24, higher than 21.6% in
2011-12. However, still lower
than the national average
of 29.7%.Services sector employment shares (2023-24)
Rural 18.8%
Urban 62.1%
Male 27.2%
Female 10.0%
Suggestions for expanding
employment opportunities
• Diversify rural employment
beyond traditional
sectors, by expanding
opportunities in areas
like public admin and
financial services. In
parallel, urban Bihar could
prioritise ICT, real estate
and professional services,
especially in areas like
Patna and Gaya.
• Promote digital inclusion
by connecting informal
workers, especially women,
to skill development, job
platforms, and social
benefits through mobile-
accessible portals and
ensure these workers have
access to portable digital
welfare IDs to maintain
continuity of social
security benefits across
the state.
• Scale community-based
service models (e.g., rural
logistics, telecom repair,
mobile banking agents).
Sub-sector
Employment share in
2023-24 (%)
Wholesale & retail trade46.9
Transportation & storage16.4
Education11.3
Other services 7.3
Accommodation & food 4.4
Activities of household 2.9
Financial & insurance 2.1
Human health & social work2.1
Administrative 2.0
Public admin 1.8
Information & communication1.7
Professional & scientific0.6
Arts, entertainment &
recreation
0.3
Real estate0.1
Source: PLFS (2023-24)
Agriculture , 54.2
Mining &
quarrying , 0.0
Manufacturing ,
5.2
Utilities , 0.2
Construction ,
18.2
Services , 22.2 India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 84
Chhattisgarh
Sectoral Employment in
Chhattisgarh
• Services sector
employment remained
low at 19.1% (~3.3 million
workers) in 2023-24,
although it marked a
rise from 14.5% in 2011-
12. This is significantly
lower than 29.7% services
employment at the
national level.Services sector employment shares (2023-24)
Rural 11.9%
Urban 54.4%
Male 22.9%
Female 13.6%
Suggestions for expanding
employment opportunities
• Leverage the expansion
of premier institutes
like NIFT, NFSU and
NIELIT alongside IIT, IIM,
AIIMS and NIT, to boost
employment in education
services and allied sectors.
• Leverage tribal medicinal
knowledge and
forest-based wellness
practices to promote
Ayurveda, naturopathy
and traditional healing,
while promoting skill
development for women
and youth in caregiving
services.
• Leverage Chhattisgarh’s
urban growth,
connectivity, and strategic
location to develop
integrated logistics,
tourism, and healthcare
ecosystems that attract
investment and create
diverse jobs.
Sub-sector
Employment share in
2023-24 (%)
Wholesale & retail trade34.1
Education 14.6
Transportation & storage 10.0
Human health & social work 9.7
Accommodation & food 6.8
Public admin & defence 6.7
Other services 6.4
Activities of households 3.8
Financial & insurance 2.9
Administrative 1.6
Professional & scientific 1.2
Information & communication 0.9
Arts, entertainment &
recreational
0.7
Real estate 0.4
Source: PLFS (2023-24)
Agriculture , 63.8
Mining &
quarrying , 0.5
Manufacturing ,
6.7
Utilities , 0.4
Construction , 9.6
Services , 19.1 India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 85
Gujarat
Sectoral Employment in
Gujarat
• Services employment rose
to 28.2% (~10.5 million
workers) in 2023-24,
from 24.8% in 2011-12 , yet
below the national average
of 29.7%.Services sector employment shares (2023-24)
Rural 14.3%
Urban 52.9%
Male 32.7%
Female 19.9%
Suggestions for expanding
employment opportunities
• Target high potential
sectors such as real
estate, information &
communication and
professional services.
• Conduct skill development
workshops for artisans
focused on product
design, quality control,
marketing and modern
techniques, replicating
successful models like
Surendranagar.
• Strengthen logistics and
trade-related services
along DFC routes and
coastal belts.
Sub-sector
Employment share in
2023-24 (%)
Wholesale & retail trade35.4
Transportation & storage14.3
Education8.1
Other services 7.8
Human health & social work 5.7
Administrative 5.3
Accommodation & food 4.5
Activities of household 4.4
Financial & insurance 4.3
Public admin 4.0
Professional & scientific 3.3
Information & communication 1.7
Real estate 0.8
Arts, entertainment &
recreation
0.5
Source: PLFS (2023-24)
Agriculture , 42.4
Mining &
quarrying , 0.1
Manufacturing ,
21.6
Utilities , 0.6
Construction , 7.0
Services , 28.2 India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 86
Haryana
Sectoral Employment in
Haryana
• Haryana’s share of
employment in the
services sector reached a
high of 42.7% (~5 million
workers) in 2023–24, up
significantly from 29.4%
in 2011–12. This is also well
above the national average
of 29.7%.Services sector employment shares (2023-24)
Rural 31.6%
Urban 60.7%
Male 44.5%
Female 36.9%
Suggestions for expanding
employment opportunities
• Leverage leading
institutions like IIM Rohtak,
NIFT Panchkula, AIIMS
Jhajjar to create jobs in
education and healthcare
services.
• Establish Model Skill
Schools and Colleges in
every district as a part
of Haryana’s education
reforms, promoting
industry-linked training to
boost employability.
• Ensure continuous
capacity development to
tap into emerging sectors
and leverage Gurugram’s
position as one of India’s
top IT/ITeS hubs to
generate jobs in fintech
and professional services.
Sub-sector
Employment share in
2023-24 (%)
Wholesale & retail trade30.1
Transportation & storage 13.6
Education12.2
Public admin 8.8
Accommodation & food5.9
Information & communication5.4
Human health & social work5.4
Other services 5.0
Professional & scientific 3.8
Financial & insurance 2.9
Activities of households2.9
Administrative 2.5
Real estate 0.9
Arts. Entertainment &
recreation
0.6
Source: PLFS (2023-24)
Agriculture , 27.5
Mining &
quarrying , 0.0
Manufacturing ,
18.3
Utilities , 0.9
Construction ,
10.6
Services , 42.7 India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 87
Himachal Pradesh
Sectoral Employment in
Himachal Pradesh
• As of 2023-24, 24% of
workforce (~1 million
workers) in Himachal
Pradesh is engaged in the
services sector – a rise
from 18.9% in 2011-12, yet
below the national average
of 29.7%.Services sector employment shares (2023-24)
Rural 21.1%
Urban 50.5%
Male 33.2%
Female 13.0%
Suggestions for expanding
employment opportunities
• Introduce handloom
and craft-based skill
programmes in ITIs,
especially in Mandi and
Kullu region, to create
employment for rural
youth and preserve local
heritage.
• Create ‘Tourism Skill
hubs’ offering hospitality,
financial and digital
training to youth, women,
and SHGs.
• Promote wellness and eco-
tourism services in hilly
areas like Dharamshala
and Manali, by developing
integrated yoga,
meditation and nature trek
experiences.
Sub-sector
Employment share in
2023-24 (%)
Wholesale & retail trade 28.3
Education 21.2
Transportation & storage 16.4
Public admin & defence 11.4
Accommodation & food 5.4
Other services 4.7
Human health& social work 3.2
Financial & insurance 2.9
Information & communication 1.6
Activities of households 1.6
Professional & scientific 1.1
Administrative 1.1
Real estate 0.7
Arts, entertainment &
recreation
0.5
Source: PLFS (2023-24)
Agriculture , 54.0
Mining & quarrying
, 0.0
Manufacturing , 8.6
Utilities , 1.9
Construction , 11.5
Services , 24.0 India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 88
Jharkhand
Sectoral Employment in
Jharkhand
• As of 2023-24, 21.6% of
Jharkhand’s workforce
(~4 million workers) is
engaged in the services
sector, unchanged from
2011-12 and below the
national average of 29.7%.Services sector employment shares (2023-24)
Rural 16.3%
Urban 55.4%
Male 28.8%
Female 10.7%
Suggestions for expanding
employment opportunities
• Expand employment
(especially among youth
and women) in education,
healthcare, and hospitality
by investing in training,
infrastructure, and public-
private partnerships.
• Leverage Jharkhand’s
tourism policy to enhance
large-scale employment,
especially in rural and
tribal areas, by developing
tourism infrastructure,
supporting homestays
and promoting the state’s
tribal culture, festivals, and
heritage circuits.
• Focus on tribal youth
skilling in local services
(e.g., eco-tourism,
hospitality, repair work).
Use SHGs to formalise care
and community-based
services, especially for
women.
Sub-sector
Employment share in
2023-24 (%)
Wholesale & retail trade38.7
Transportation & storage14.8
Education11.6
Accommodation & food8.2
Human health & social work5.4
Other services4.9
Activities of households4.7
Administrative2.9
Public admin & defence2.5
Financial & insurance2.1
Professional & scientific1.8
Information & communication1.4
Real estate0.6
Arts, entertainment &
recreation
0.3
Source: PLFS (2023-24)
Agriculture , 50.0
Mining &
quarrying , 0.9
Manufacturing ,
9.3
Utilities , 0.2
Construction ,
18.0
Services , 21.6 India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 89
Karnataka
Sectoral Employment in
Karnataka
• 32.9% of Karnataka’s
workforce (~10.2 million
workers) is engaged in the
services sector as of 2023-
24, a slight rise from 31%
in 2011-12 and also higher
than the national average
of 29.7%.Services sector employment shares (2023-24)
Rural 17.0%
Urban 63.8%
Male 36.6%
Female 25.7%
Suggestions for expanding
employment opportunities
• Prioritise skilling in
high employment
elastic sectors such as
information & technology,
financial services, health,
travel and professional
services to maximise job
creation.
• Leverage Bangalore’s
status as a key R&D
hub by offering special
incentives to multinational
companies and investors
that establish research
centres in the city. This
will help boost high-skilled
employment in the state.
• Expand hospitals,
diagnostic centers, and
wellness tourism facilities
in tier-2 towns and
emerging urban centres
such as Mysuru, Hubballi-
Dharwad and Belagavi.
Sub-sector
Employment share in
2023-24 (%)
Wholesale & retail trade29.5
Transportation & storage14.1
Information & communication12.7
Education9.3
Accommodation & food7.6
Public admin & defence4.7
Human health & social work4.6
Financial & insurance4.3
Activities of households3.6
Administrative2.9
Other services2.9
Professional & scientific1.9
Real estate1.6
Arts, entertainment &
recreation
0.2
Source: PLFS (2023-24)
Agriculture , 46.5
Mining &
quarrying , 0.1
Manufacturing ,
10.9
Utilities , 0.5
Construction , 9.2
Services , 32.9 India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 90
Kerala
Sectoral Employment in
Kerala
• As of 2023-24, 48.5% of
workforce (~7.5 million
workers) in Kerela is
engaged in the services
sector – a rise from 42.6%
in 2011-12 and way over the
national average of 29.7%.Services sector employment shares (2023-24)
Rural 40.0%
Urban 58.6%
Male 49.3%
Female 47.3%
Suggestions for expanding
employment opportunities
• Build on Kerala’s global
reputation in Ayurveda
and eco-tourism by
upgrading facilities and
training hospitality staff.
Develop niche tourism
segments like medical
tourism, wellness retreats,
and cultural tourism
to drive employment
opportunities, especially in
rural areas.
• Leverage rapid expansion
of Kerala’s IT parks in
Thiruvananthapuram
and Kochi, by promoting
innovation hubs in AI,
fintech, etc and encourage
academic-industry
collaboration through
skilled development
programmes in these
areas.
• Promote training in
content development,
software, teaching and
digital skills to expand
employment in the Edtech
sector.
Sub-sector
Employment share in
2023-24 (%)
Wholesale & retail trade 31.8
Transportation & storage 12.0
Education 8.9
Accommodation & food 8.3
Human health & social work 7.2
Financial & insurance 5.4
Information & communication 4.8
Public admin & defence 4.5
Activities of households 4.2
Administrative 3.8
Other services 3.7
Professional & scientific 3.2
Arts, entertainment &
recreation
1.8
Real estate 0.5
Source: PLFS (2023-24)
Agriculture , 27.0
Mining &
quarrying , 0.3
Manufacturing ,
9.9
Utilities , 0.8Construction ,
13.4
Services , 48.5 India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 91
Madhya Pradesh
Sectoral Employment in
Madhya Pradesh
• 19.7% of MP’s workforce is
employed in the services
sector (~9.2 million
workers) as of 2023-24,
a marginal decline from
20.3% in 2011-12 and
significantly lower than the
national average of 29.7%.Services sector employment shares (2023-24)
Rural 10.7%
Urban 55.8%
Male 25.1%
Female 10.8%
Suggestions for expanding
employment opportunities
• Improve digital
infrastructure to develop
IT hubs in cities like Indore
and Bhopal.
• Set up more skill parks
across the state, like
the Global Skill Park
in Bhopal, focused
on emerging services
sectors like information &
communication, finance
and professional services.
• Leverage MP’s rich cultural
heritage and wildlife
by developing tourism
infrastructure in key
destinations like Khajuraho
and Pachmarhi.
Sub-sector
Employment share in
2023-24 (%)
Wholesale & retail trade 39.7
Transportation & storage 13.5
Education 11.1
Accommodation7.9
Public admin & defence 6.3
Other services 5.2
Human health & social work 5.0
Financial & insurance 3.2
Activities of households 2.6
Administrative 1.4
Professional & scientific 1.3
Information & communication1.2
Arts, entertainment &
recreation
1.0
Real estate 0.6
Source: PLFS (2023-24)
Agriculture , 61.6
Mining &
quarrying , 0.2
Manufacturing ,
8.0
Utilities , 0.4
Construction ,
10.2
Services , 19.7 India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 92
Maharashtra
Sectoral Employment in
Maharashtra
• As of 2023-24, 36.2% of
workforce in Maharashtra
is engaged in the services
sector – a rise from 31.9%
in 2011-12 and above the
national average of 29.7%.
• The state is one of the
leading contributors to the
services sector, with 21.5
million workers employed
in the sector.Services sector employment shares (2023-24)
Rural 18.1%
Urban 65.6%
Male 40.2%
Female 28.4%
Suggestions for expanding
employment opportunities
• Leverage GCC growth
to create quality jobs
by enhancing digital
infrastructure and
offering incentives
in cities like Nagpur,
Nashik, and Aurangabad,
thereby expanding tech
opportunities beyond
Mumbai and Pune.
• Leverage Mumbai’s status
as a financial hub to
expand employment in
banking, insurance, fintech,
and professional services
through targeted skilling
and industry partnerships.
• Leverage large-scale
infrastructure projects
(Mumbai metro, Mumbai
Trans Harbour Link, etc)
to boost jobs in transport,
and logistics activities.
Sub-sector
Employment share in
2023-24 (%)
Wholesale & retail trade 27.8
Transportation & storage 13.1
Information & communication9.0
Education 7.9
Accommodation & food6.7
Activities of household6.0
Financial & insurance5.6
Human health & social work5.1
Other services4.8
Public admin & defence4.5
Administrative4.4
Professional & scientific3.5
Arts, entertainment &
recreation
0.9
Real estate0.8
Source: PLFS (2023-24)
Agriculture , 43.2
Mining &
quarrying , 0.2
Manufacturing ,
12.7
Utilities , 0.7
Construction , 7.0
Services , 36.2 India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 93
Odisha
Sectoral Employment in
Odisha
• 25% of Odisha’s workforce
is engaged in the services
sector (~5.4 million
workers) as of 2023-24 – a
moderate rise from 21.6%
in 2011-12, yet below the
national average of 29.7%.
• The state is one of the
leading contributors to the
services sector, with 21.5
million workers employed
in the sector.Services sector employment shares (2023-24)
Rural 19.8%
Urban 65.6%
Male 32.0%
Female 14.4%
Suggestions for expanding
employment opportunities
• Strengthen hospitality and
cultural services around
heritage sites.
• Strengthen rural
healthcare by making
PHCs and sub-center
fully functional with
telemedicine support,
creating adequate jobs
for doctors, technicians,
community health
workers and telehealth
coordinators.
• Leverage the vibrant
handloom and crafts
sector in Cuttack and
Puri by expanding EKTA’s
artisan support to include
training, workshops and
design services.
Sub-sector
Employment share in
2023-24 (%)
Wholesale & retail trade 36.4
Transportation & storage 16.3
Education 12.1
Accommodation & food 7.3
Other services 5.8
Administrative 5.0
Human health& social work 4.1
Public admin & defence 3.8
Financial & insurance 2.8
Activities of households 2.5
Professional & scientific 2.1
Information & communication 0.9
Arts, entertainment &
recreation
0.7
Real estate 0.2
Source: PLFS (2023-24)
Agriculture , 48.9
Mining &
quarrying , 0.4
Manufacturing ,
7.2
Utilities , 0.6
Construction ,
18.0
Services , 25.0 India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 94
Punjab
Sectoral Employment in
Punjab
• As of 2023-24, 40.8%
Punjab’s workforce is
engaged in the services
sector (~5.4 million
workers)– a sharp increase
from 32% in 2011-12 and
significantly above the
national average of 29.7%.Services sector employment shares (2023-24)
Rural 29.6%
Urban 60.7%
Male 39.7%
Female 43.8%
Suggestions for expanding
employment opportunities
• Leverage Punjab’s
agriculture strength to
promote jobs in agro-
linked services such as
food processing, logistics,
agri-tech and cold chain
management.
• Establish training
centres that focus on
vocational skills relevant to
emerging service sectors
such as information &
communication, financial
and professional services.
• Promote equitable wage
policies for women
across sectors, coupled
with continuous skill
development programmes
such as vocational training
and digital literacy.
Sub-sector
Employment share in
2023-24 (%)
Wholesale & retail trade 33.0
Transportation & storage 11.0
Education 10.9
Other services 9.9
Activities of households 8.3
Human health& social work 5.6
Accommodation & food 4.7
Public admin & defence 4.3
Financial & insurance 3.4
Professional & scientific 3.3
Administrative 1.9
Information & communication 1.7
Arts, entertainment &
recreation
1.2
Real estate 0.7
Source: PLFS (2023-24)
Agriculture , 27.2
Mining &
quarrying , 0.1
Manufacturing ,
17.8
Utilities , 1.3
Construction ,
12.8
Services , 40.8 India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 95
Rajasthan
Sectoral Employment in
Rajasthan
• As of 2023-24, 24.6% of
workforce in Rajasthan is
engaged in the services
sector (~9.6 million
workers) – an increase
from 19.9% in 2011-12, yet
below the national average
of 29.7%.Services sector employment shares (2023-24)
Rural 16.1%
Urban 54.4%
Male 33.4%
Female 11.6%
Suggestions for expanding
employment opportunities
• Establish IT parks and
digital service hubs in tier
2 and tier 3 cities like Kota,
Ajmer and Bikaner to drive
regional employment in
the state.
• Expand women-focused
service clusters in wellness,
hospitality, and digital
services.
• Establish Medtech focused
skilling and training
centres in collaboration
with industry to train youth
in biomedical, diagnostics,
medical device operations
and related fields, while
also incorporating soft
skills and customer service
training.
Sub-sector
Employment share in
2023-24 (%)
Wholesale & retail trade 34.9
Transportation & storage 15.1
Education 11.1
Accommodation & food 7.7
Other services 6.0
Human health& social work 4.7
Public admin & defence 3.9
Professional & scientific 3.3
Financial & insurance 3.1
Administrative 3.1
Activities of households 2.8
Information & communication 2.4
Arts, entertainment &
recreation
21.4
Real estate 0.6
Source: PLFS (2023-24)
Agriculture , 51.1
Mining &
quarrying , 0.5
Manufacturing ,
11.0
Utilities , 0.6
Construction ,
12.3
Services , 24.6 India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 96
Tamil Nadu
Sectoral Employment in
Tamil Nadu
• As of 2023-24, 37.9% of
workforce in Tamil Nadu
is engaged in the services
sector (~13.5 million
workers) – a rise from 31%
in 2011-12 and significantly
above the national average
of 29.7%.Services sector employment shares (2023-24)
Rural 24.4%
Urban 58.4%
Male 44.0%
Female 27.9%
Suggestions for expanding
employment opportunities
• Strengthen the information
& communication and
digital services sector
beyond Chennai by
developing relevant
infrastructure in tier 2 and
tier 3 cities.
• Provide targeted
training in high-growth
sectors such as retail,
hospitality, information
& communication and
healthcare and expand
advanced skilling in AI,
healthcare, and EV-related
services.
• Expand urban service hubs
in Coimbatore, Madurai
with plug-and-play
infrastructure.
Sub-sector
Employment share in
2023-24 (%)
Wholesale & retail trade 29.6
Transportation & storage 16.3
Education 9.5
Accommodation & food 8.5
Information & communication 8.3
Other services 4.8
Activities of households 4.5
Financial & insurance 4.4
Public admin & defence 4.2
Human health& social work 3.8
Administrative 2.4
Professional & scientific 2.1
Real estate 1.0
Arts, entertainment &
recreation
0.6
Source: PLFS (2023-24)
Agriculture , 28.0
Mining &
quarrying , 0.2
Manufacturing ,
16.0
Utilities , 0.8
Construction ,
17.2
Services , 37.9 India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 97
Telangana
Sectoral Employment in
Telangana
• As of 2023-24, 34.8% of
workforce in Telangana is
engaged in the services
sector (~6.2 million
workers), much higher
than 29.7% at the national
level.Services sector employment shares (2023-24)
Rural 18.9%
Urban 66.6%
Male 41.5%
Female 23.9%
Suggestions for expanding
employment opportunities
• Leverage Telangana’s
leadership in the
information &
communication sector
by providing relevant
infrastructure to promote
growth in tier 2 cities
such as Warangal and
Karimnagar. Also deepen
formal employment in
Hyderabad’s tech-driven
service sector.
• Expand targeted skilling
programmes through
the Telangana Academy
for Skill and Knowledge
(TASK) to create equitable
employment opportunities,
particularly in tier 2 and
rural regions.
• Leverage Telangana’s
location and logistics
infrastructure such as
Logistics Parks and the
Hyderabad–Warangal
Industrial Corridor to drive
employment in related
sectors.
Sub-sector
Employment share in
2023-24 (%)
Wholesale & retail trade 28.2
Transportation & storage 16.1
Information & communication 12.0
Education 9.3
Public admin & defence 5.9
Other services 5.7
Accommodation & food 5.0
Financial & insurance 4.9
Activities of households 4.5
Human health& social work 4.3
Professional & scientific 1.6
Real estate 1.3
Administrative 1.1
Arts, entertainment &
recreation
0.3
Source: PLFS (2023-24)
Agriculture , 42.5
Mining &
quarrying , 0.2
Manufacturing ,
12.8
Utilities , 0.3
Construction , 9.4
Services , 34.8 India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 98
Uttarakhand
Sectoral Employment in
Uttarakhand
• 33.1% of workforce in
Uttarakhand is engaged
in the services sector (~1.8
million workers) in 2023-
24 – a moderate rise from
28.9% in 2011-12 and also
above the national average
of 29.7%.Services sector employment shares (2023-24)
Rural 24.7%
Urban 66.3%
Male 39.9%
Female 22.3%
Suggestions for expanding
employment opportunities
• Promote eco-tourism and
wellness-based services
in the state by providing
relevant training in
hospitality, wellness and
eco-tourism management,
especially for the rural
population.
• Improve access to
healthcare in hilly and
remote areas by scaling
up telemedicine, mobile
health units, diagnostic
labs and community health
services.
• Set up specialised
craft training centres
dedicated to preserving
Uttarakhand’s unique arts
like Aipan painting and
Ringal weaving.
Sub-sector
Employment share in
2023-24 (%)
Wholesale & retail trade 28.3
Education 18.2
Accommodation & food 16.8
Transportation & storage 11.3
Other services 6.2
Human health& social work 4.0
Public admin & defence 3.5
Administrative 3.1
Information & communication 3.0
Financial & insurance 2.0
Activities of households 1.7
Professional & scientific 1.4
Real estate 0.4
Arts, entertainment &
recreation
0.1
Source: PLFS (2023-24)
Agriculture , 42.3
Mining &
quarrying , 0.2
Manufacturing ,
13.0
Utilities , 0.5
Construction ,
10.8
Services , 33.1 India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 99
Uttar Pradesh
Sectoral Employment in Uttar
Pradesh
• As of 2023-24, 22.7%
of workforce in UP is
engaged in the services
sector – a moderate rise
from 21.2% in 2011-12, yet
below the national average
of 29.7%.
• With around 22.1 million
workers, the state is a
leading contributor to the
services sector. Services sector employment shares (2023-24)
Rural 14.7%
Urban 59.7%
Male 28.0%
Female 10.7%
Suggestions for expanding
employment opportunities
• Leverage the growing
infrastructure and
urbanisation in cities like
Lucknow, Kanpur, Varanasi
and Meerut to establish IT
parks, digital service hubs
and BPO clusters.
• Expand skilling in health
services, logistics, and IT-
enabled services through
district skill centres.
• State’s religious sites such
as Ayodhya, Varanasi and
Mathura offer potential
to boost tourism-linked
employment.
Sub-sector
Employment share in
2023-24 (%)
Wholesale & retail trade44.0
Transportation & storage13.5
Education9.7
Other services 6.8
Accommodation & food 6.3
Public admin & defence 4.1
Human health & social work 3.0
Administrative 2.7
Professional & scientific 2.3
Financial & insurance 2.2
Information & communication2.0
Activities of household 2.0
Arts, entertainment &
recreation
0.8
Real estate 0.6
Source: PLFS (2023-24)
Agriculture , 55.9
Mining &
quarrying , 0.1
Manufacturing ,
8.5
Utilities , 0.4
Construction ,
12.4
Services , 22.7 India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 100
West Bengal
Sectoral Employment in West
Bengal
• As of 2023-24, 33.4% of
workforce in West Bengal
is engaged in the services
sector (~15.7 million
workers) – a rise from
29.4% in 2011-12 and above
the national average of
29.7%. Services sector employment shares (2023-24)
Rural 22.9%
Urban 61.2%
Male 37.8%
Female 24.7%
Suggestions for expanding
employment opportunities
• Support SHGs in
producing and marketing
unique Sundarbans
crafts, honey and organic
products, selling them
directly to tourists at key
locations.
• Expand logistics hubs
in Haldia and Siliguri to
create e-commerce-linked
jobs in warehousing,
supply chain and delivery
services, alongside
targeted skill development
for retail, health, and
IT services in Kolkata
and Asansol-Durgapur
corridors.
• Promote jobs in digital
content, filmmaking,
animation, publishing,
and OTT by leveraging
Kolkata’s strong creative
and media legacy.
Strengthen cultural
services and digital
content industries linked
to Bengali arts and
literature.
Sub-sector
Employment share in
2023-24 (%)
Wholesale & retail trade 34.7
Transportation & storage 15.3
Education 10.4
Activities of households 8.8
Accommodation & food 6.3
Other services 5.6
Human health& social work 4.0
Administrative 3.5
Public admin & defence 3.4
Information & communication 2.6
Financial & insurance 2.5
Professional & scientific 1.6
Arts, entertainment &
recreation
0.8
Real estate 0.7
Source: PLFS (2023-24)
Agriculture , 38.2
Mining &
quarrying , 0.2
Manufacturing ,
16.7
Utilities , 0.4
Construction ,
11.1
Services , 33.4 India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 101
Chandigarh
Sectoral Employment in
Chandigarh
• As of 2023-24, 77.9% of
workforce in Chandigarh
is engaged in the services
sector (~0.4 million
workers) – a rise from
76.6% in 2011-12 and
significantly above the
national average of 29.7%.Services sector employment shares (2023-24)
Rural 0%
Urban 77.9%
Male 73.4%
Female 91.4%
Suggestions for expanding
employment opportunities
• Boost innovation in legal-
tech, consulting, and
professional services
through targeted
incubation, academic
collaboration, and shared
service labs.
• Align academic courses
at institutions like Punjab
University and RGNIYD
with emerging sectors
including AI, fintech,
health-tech.
• Establish a dedicated
Medtech innovation hub
to boost services such as
telemedicine, diagnostics
and healthcare AI.
Sub-sector
Employment share in
2023-24 (%)
Wholesale & retail trade 21.8
Public admin & defence 14.0
Information & communication 11.9
Financial & insurance8.2
Activities of households 8.1
Transportation & storage 6.8
Education6.3
Accommodation & food 6.0
Human health & social work5.7
Professional & scientific 4.8
Other services3.6
Real estate 1.2
Administrative 1.0
Arts, entertainment &
recreation
0.7
Source: PLFS (2023-24)
Agriculture , 0.0
Mining &
quarrying , 0.0
Manufacturing ,
15.1
Utilities , 0.7
Construction , 6.4
Services , 77.9 India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 102
Delhi
Sectoral Employment in Delhi
• As of 2023-24, 71% of
workforce in Delhi is
engaged in the services
sector (~5.9 million
workers), much higher
than the national average
of 29.7%.Services sector employment shares (2023-24)
Rural 40.4%
Urban 71.8%
Male 69.4%
Female 77.8%
Suggestions for expanding
employment opportunities
• Promote digital inclusion
by connecting informal
workers, especially women
to skill development,
job platform and social
benefits through mobile
portals, ensuring seamless
access to digital welfare
IDs across Delhi.
• Develop skill programmes
for tourism, hospitality and
event management linked
to Delhi’s rich heritage and
cultural sites.
• Support startups in
service sectors like ITeS,
consulting and creative
industries with export
readiness programmes,
certifications and market
linkages.
Sub-sector
Employment share in
2023-24 (%)
Wholesale & retail trade 28.9
Activities of households 11.6
Transportation & storage 11.2
Financial & insurance 6.3
Other services5.8
Education5.8
Administrative5.7
Accommodation & food 5.3
Public admin & defence 5.0
Information & communication4.3
Professional & scientific 4.2
Human health & social work3.1
Real estate 1.8
Arts, entertainment &
recreation
1.0
Source: PLFS (2023-24)
Agriculture , 0.3
Mining &
quarrying , 0.0
Manufacturing ,
16.5
Utilities , 2.7
Construction , 9.6
Services , 71.0 NOTES NOTES NOTES India?s Services Sector:
Insights from Employment Trends and State Level Dynamics 107