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India’s Services Sector: Insights from GVA Trends and State-Level Dynamics 1INSIGHTS FROM GVA
TRENDS AND STATE
LEVEL DYNAMICS

INDIA’S SERVICES
SECTOR Services Division Team:
Dr. Sonia Pant (Programme Director)
Dr. Vidya C.T (Consultant Grade II)
Ms. Ambika Shukla (Consultant Grade I)
Ms. Shivangi Sikarwar (Young Professional)
Suggested Citation
NITI Aayog. (2025). India’s Services Sector: Insights from GVA 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 GVA Trends and State-Level Dynamics v
Contents
Executive Summary��1
1. Introduction��4
2. Global Context: Sectoral Composition and Structural Transformation��7
3. Services-Led Structural Transformation in India��13
3.1 Sectoral Trends in GVA (2011-12 to 2023–24)��13
3.2 Sectoral Growth Volatility and Service Sector Resilience��16
3.3 Sectoral Composition of Services: Sub-Sectoral Growth Trends��17
3.4 Contribution of Services’ Sub-Sectors to Overall GVA Growth��21
4. The Services Sector across States/UTs: A State-wise GVA Analysis��24
4.1 Sectoral Composition of National GVA at State Level: Primary, Secondary, and Services
Sector��24
4.2 Changing Pattern of Services Contribution across States��24
4.3 State-wise Dynamics at Disaggregated Services Sectors��29
5. Service Sector Composition and State Income Patterns ��33
6. Service Sector Growth in Indian States: Patterns and Opportunities for Convergence��42
6.1 Trends in Regional Disparities in Service Sector Growth��42
6.2 Catch-up Dynamics in Service Sector Growth across States��43
7. Strategy and Policy Imperatives for India’s Services Sector��45
7.1 Sectoral Prioritisation: Mapping Services for Policy��45
7.2 State Specific Recommendation��50
8. Conclusion��54
References��56
Appendix��61
Endnotes��65
Annexure��66 India’s Services Sector: Insights from GVA Trends and State-Level Dynamicsvi
List of Figures
Figure 2.1: Global Sectoral Composition of Value Added (% Share, 2000-2023)��7
Figure 2.2: Sectoral Value Added – World, Developing & Developed Economies (2000 & 2023)��8
Figure 2.3: Structural Shift by Income Group in Developing Economies (2000 vs. 2023)��10
Figure 2.4: Top 20 Economies as per Service Sector Value Added (2023)��12
Figure 3.1: Sectoral Decomposition of GVA in India (% Share, 2011–12 to 2023–24)��15
Figure 3.2: Annual Sectoral Growth Trends in India (% YoY, 2012–13 to 2023–24)��17
Figure 3.3: Contribution of Services Sub-Sectors to Services GVA Growth (in Percentage Points,
2012–13 to 2023–24)��22
Figure 4.1: State-wise Shares in National Sectoral GVA (2023-2024)��25
Figure 4.2: Services Sector Share in GSVA (2011-12 & 2023-24)��28
Figure 4.3: Share of Leading States/UTs across Service Sub-Sectors (2011-12 Vs 2023-24)��31
Figure 5.1: Relationship between Average Services Sector Share in GSVA and Average PCI across
States (2011–12 to 2023–24)��35
Figure 6.1: Inter-State Differences in Services Sector Performance over time (2011-12 to 2023-24)
��43
Figure 7.1: Policy-Relevant Mapping of Services Sub-Sectors by Average GVA Share and Compound
Annual Growth Rate (2011–12 to 2023–24)��46 India’s Services Sector: Insights from GVA Trends and State-Level Dynamics vii
List of Tables
Table 3.1: Average Sectoral Composition of GVA (% share, 2011-12 to 2023-24)��13
Table 3.2: Sectoral Trends of 15 Concorded Services’ Sub-Sectors (Triennial Data) - Value (in INR Trillion)
& % Share in Services GVA ��20
Table 3.3: Sectoral trends of 15 Concorded Services’ Sub-Sectors (Triennial Data) - Rate of
Growth (in %)��21
Table 5.1: State/UT-wise Average Composition of Services GSVA by Sub-Sectors (in %, 2011-12 to
2023-24)��38
Table 7.1: Services Sub-Sectors’ Policy Unlocks��50
Table 7.2: Summary: State Group-wise Policy Unlocks��53 India’s Services Sector: Insights from GVA Trends and State-Level Dynamicsviii
List of Abbreviations
Abbreviation Description
ABDMAyushman Bharat Digital Mission
AGRAdjusted Gross Revenue
AIArtificial Intelligence
AKICAmritsar-Kolkata Industrial Corridor
ASAPAdditional Skill Acquisition Programme
AVAudio Visual
AYUSH Ayurveda, Yoga, and Naturopathy, Unani, Siddha, and Homeopathy
B2BBusiness-to-Business
BPOBusiness Process Outsourcing
CAGRCompound Annual Growth Rate
CIIConfederation of Indian Industry
COVID Coronavirus Disease
DBTDirect Benefit Transfer
DMICDelhi Mumbai Industrial Corridor
DPIDigital Public Infrastructure
EDFCEastern Dedicated Freight Corridor
ESDMElectronics System Design & Manufacturing
ESGEnvironmental, Social and Governance
EVElectric Vehicle
FDIForeign Direct Investment
FEFixed Effects
FISIM Financial Intermediation Services Indirectly Measured
FMCGFast-Moving Consumer Goods
FPOFarmers Producer Organization
FYFinancial Year
GCCGlobal Capability Centres
GDPGross Domestic Product
GEDAGujarat Energy Development Agency
GIFT City Gujarat International Finance Tec-City
GIDCGujarat Industrial Development Corporation
GSDMGujarat Skill Development Mission
GSDPGross State Domestic Product
GSTGoods and Services Tax
GSVAGross State Value Added India’s Services Sector: Insights from GVA Trends and State-Level Dynamics ix
Abbreviation Description
GVAGross Value Added
InsurTech Insurance Technology
IoTInternet of Things
IPIntellectual Property
ITInformation Technology
ITESInformation Technology Enabled Services
KMPKundli-Manesar-Palwal
MLMachine Learning
MoSPI Ministry of Statistics and Programme Implementation
MSMEMicro, Small and Medium Enterprises
NASSCOM National Association of Software and Service Companies
NGONon-governmental Organization
NIENot Included Elsewhere
NITINational Institution for Transforming India
NRINon-Resident Indian
NSVANet State Value Added
O&M Operations and Maintenance
OTTOver-The-Top
PCIPer Capita Income
PHCPrimary Health Centre
PPPPublic-Private Partnership
R&DResearch & Development
RERenewable Energy
RegTech Regulatory Technology
RGUKT Rajiv Gandhi University of Knowledge Technologies
SaaSSoftware as a Service
SCADA Supervisory Control and Data Acquisition
SHGSelf Help Group
SMESmall and Medium Enterprises
TaaSTesting-as-a-Service
TASKTelangana Academy for Skill and Knowledge
UNCTAD United Nations Conference on Trade and Development
ULIPUnified Logistics Interface Platform
UPIUnified Payments Interface
USDUnited States Dollar
UTUnion Territory India’s Services Sector: Insights from GVA Trends and State-Level Dynamics1
EXECUTIVE SUMMARY
India’s economic development has witnessed
an early and distinctive shift towards a
services-led structural transformation,
diverging from the conventional sequence
of agriculture–industry–services. In 2024–25,
the services sector contributed nearly 55% of
Gross Value Added (GVA), while the primary
and secondary sectors accounted for 16% and
29%, respectively.
The services sector is heterogeneous in
composition, encompassing high-value,
modern services such as information
technology (IT), financial services, real estate,
and professional services, alongside traditional
activities like trade, hospitality, and transport
that remain vital for employment generation
and domestic consumption. This diversity is
also reflected across states: while Karnataka,
Maharashtra, Tamil Nadu, and Telangana
contribute significantly through modern, high-
productivity services, several other states are
more concentrated in traditional sub-sectors.
Against this backdrop, the report analyses
national and sub-national patterns of services
sector growth, inter-state variations, and
emerging signs of convergence. It also
identifies policy priorities needed to promote
a more regionally balanced and inclusive
structural transformation. These efforts are
aligned with the broader national vision of
Viksit Bharat @2047, aimed at building a
globally competitive, resilient, and inclusive
economy.
Structural Transformation and Resilience
Between 2011–12 and 2023–24, India’s economic
structure underwent continued evolution, with
the services sector consolidating its position
as the largest contributor to GVA. During
this period, the share of the primary sector
declined from 21.8% to 16.7%, the secondary
sector remained broadly stable at around 28–
29%, and the services sector expanded from
49% to 54.5%.
The services sector has emerged as the
most stable and resilient component of
GVA. Whereas the primary sector remained
vulnerable to climatic fluctuations and the
secondary sector displayed cyclical variability,
services maintained steady momentum. The
post-pandemic recovery was led by high-
value sectors, particularly IT, finance, and
professional services which leveraged digital
platforms to sustain operations and growth.
These developments highlight the growing
role of services in supporting macroeconomic
stability and driving long-term growth of the
economy.
Composition and Contribution of
Services
A novel classification of 15 services subsectors
indicates that three segments, professional,
scientific and business services (including real
estate), trade and repair, and computer and
information services, together account for over
half of services GVA. Among these, computer
and information services have seen the most
significant expansion, growing nearly fourfold
since 2011–12, and reinforcing India’s position in
global digital services.
Financial and government services have
contributed steadily, while education and health
have gained importance, particularly after the
pandemic. In contrast, transport, travel, and
personal services show greater variability,
though they continue to support employment
and consumption. Smaller segments such as
telecommunications, insurance, postal, and
audio-visual services have expanded with the
growth of digital platforms and e-commerce. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics 2
These patterns underscore the dual structure
of the services sector, comprising both high-
productivity, tradable activities and traditional,
labor-intensive segments critical to inclusive
growth. These trends suggest that it is not
merely the scale of services activity but its
quality shaped by tradability, productivity, and
degree of formality, that ultimately determines
developmental outcomes.
State-Level Dynamics of the Services
Sector
India’s services-led growth has been
geographically uneven but is expanding
across regions. Karnataka, Telangana, Tamil
Nadu, Kerala, and Maharashtra have emerged
as major service-oriented economies, with
services accounting for over half of their
GSVA. These states benefit from urban centres,
skilled workforce, and digital infrastructure,
supporting growth in sectors such as IT, finance,
real estate, and professional services. Union
Territories, including Delhi and Chandigarh,
report services shares exceeding 85%,
reflecting the dominance of urban economy
and modern services.
Encouragingly, several North-Eastern states,
including Meghalaya, Manipur, Nagaland,
and Arunachal Pradesh, have also recorded
notable growth in services, while states such as
Punjab, Haryana, Uttar Pradesh, West Bengal,
Rajasthan, Andhra Pradesh, and Jharkhand
show more moderate improvements.
Services and State Income Patterns
The report finds a strong association between
the average share of services in GSVA and
average state per capita income levels.
States and UTs with more developed service
economies, such as Delhi, Chandigarh,
Karnataka, Telangana, and Maharashtra, tend
to record higher per capita incomes, supported
by activities in IT, finance, and professional
services.
In several lower-income states, services also
account for a significant share of GSVA, but
are concentrated mainly in traditional sectors
such as trade, repair, and public administration.
While these activities remain important for
employment and domestic demand, they
highlight the scope for diversification into
higher-value services.
At the same time, patterns across states are
not uniform. In some cases, a relatively high
services share does not directly translate into
higher income levels, whereas in others, more
modest shares coexist with a higher services
output. These variations reflect underlying
structural differences in sectoral composition,
levels of formality, and the strength of inter-
sectoral linkages.
Can Services Foster Inclusive Growth?
A key consideration in the analysis is whether
the expansion of services has contributed to
regionally inclusive growth. To assess this,
two standard measures of convergence are
applied. The first, sigma (σ) convergence,
examines the dispersion of services’ GSVA
shares across states over time. The second,
beta (β) convergence, tests whether states
with initially lower shares of services have
experienced faster growth, thereby narrowing
gaps with more advanced states.
While sigma convergence shows modest
widening of inter-state disparities between
2011–12 and 2023–24, evidence from beta
convergence suggests that states starting
from lower service shares have grown relatively
faster, indicating a gradual catch-up.
Taken together, these findings point to a
broadening in services-led growth. Achieving
deeper regional convergence, however, will
require sustained investment in infrastructure,
human capital, and institutional capacity,
enabling lagging states to integrate more fully
into high-value service activities. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics3
Mapping Services for Policy
To translate the services sector’s growth into
broad-based and inclusive development,
the report adopts a structured analytical
framework for sectoral prioritization and
State-wise strategies. By mapping services
sub-sectors based on their average GVA
shares and compound annual growth rates
(2011–12 to 2023–24), the framework generates
a four-quadrant classification, namely, Engines
of Growth, Emerging Stars, Mature Giants,
and Struggling Segments. This classification
supports more focused policy responses,
allowing policymakers to expand high-
performing sectors, nurture emerging areas,
modernize slower-growing segments, and
reform underperforming sectors based on their
current scale and growth trends. Enhancing
digital infrastructure and export facilitation is
a key priority. Some of the policy measures
include: investing in innovation for high-
growth sectors; skill ecosystems for emerging
domains; streamlining regulation and delivery
for mature but stagnating sub-sectors; and
modernizing traditional services with digital
infusion and focused reforms.
In parallel, state-level strategies and the
accompanying annexures reflect the
heterogeneity of service economies across
22 states, integrating sub-national growth
dynamics, sectoral concentration, and
institutional readiness. The report proposes a
phased and differentiated approach to state-
level policy action, tailored to the maturity and
composition of each state’s services sector.
The framework rests on three interlinked
priorities: establishing core infrastructure
(digital, spatial, and institutional) to support
services expansion; integrating services within
local industrial ecosystems and enhancing
workforce capabilities through targeted skilling;
and scaling decentralized service delivery to
promote inclusive innovation. These policy
directions aim to unlock regionally grounded
opportunities, including the development of
urban technology clusters, logistics corridors,
and locally embedded service ecosystems.
Taken together, this integrated sector–state
policy architecture provides a forward-looking
roadmap for enhancing productivity, expanding
quality employment, and supporting long-term
structural transformation. By applying analytical
rigor through a unified framework, the report
underscores the central role of the services
sector in building a resilient, competitive, and
inclusive Indian economy by 2047.
*** India’s Services Sector: Insights from GVA Trends and State-Level Dynamics 4
The global economy has undergone a structural
transformation in recent years, characterized
by a shift from traditional sectors towards a
more service-oriented structure, largely driven
by technological advancements. As a result, the
services sector has become the predominant
contributor to output, employment, and
productivity in most countries. By 2023, the
services sector accounted for approximately
two-thirds of the global GDP and nearly half
of the global employment. The observed
structural shift diverges from the conventional
pattern of economic development, which
typically progresses from agriculture to
industry and then services. Instead, countries
across different income levels are experiencing
a more direct transition to services-led growth,
reflecting deeper technological integration,
increasing global interconnectedness, and
rising demand for intangible, knowledge-
intensive outputs (World Bank, 2019).
In middle-income economies, services now
account for close to or over half of the total
value added, accentuating their growing role
in structural transformation. The drivers of this
shift, ranging from urbanization and digital
connectivity to the expansion of tradable and
technology-enabled services, have created
new pathways for productivity growth and
international competitiveness, even in the
absence of large-scale industrialization (World
Bank, 2024).
India’s development experience reflects this
broader global realignment, with the services
sector emerging as the principal engine of
economic growth. As of 2024–25, services
contribute an estimated 55% of India’s Gross
Value Added (GVA), up from approximately
51% in 2013–14, emphasising its role as the
primary source of domestic value creation. The
sector also accounts ~30% of total employment
and remains the top recipient of total Foreign
Direct Investment (FDI) (Economic Survey,
2024-25).
On the global stage, India has consolidated its
position as a major exporter of services, ranking
as the seventh-largest exporter of services. Its
share in global services exports doubled from
1.9% in 2005 to 4.3% in 2023 (Economic Survey,
2024-25), driven by enduring comparative
advantages in information technology (IT),
professional and business services, and
digitally deliverable services. Looking ahead,
even if services continue to contribute in the
range of 55-56% of GVA, by 2047 the services
output could potentially rise to USD 15–16
trillion (NITI Aayog, 2025).
Historically, the services sector was perceived
as non-scalable and largely confined to
domestic markets due to its dependence on
face-to-face delivery, proximity to consumers,
and real-time responsiveness (Baumol, 1967).
These characteristics limited the sector’s
ability to expand across geographies or
achieve productivity gains on the scale seen in
manufacturing.
However, this traditional view has undergone
a dramatic shift. The advent of digital
technologies, particularly internet-based
platforms, automation, and remote service
delivery models has transformed the nature
of services. Services can now be digitized,
modularized, and delivered remotely, allowing
them to scale rapidly and overcome earlier
geographical and operational constraints. This
evolution has unlocked new forms of value
creation, especially in digitally enabled and
knowledge-intensive services.1
Introduction India’s Services Sector: Insights from GVA Trends and State-Level Dynamics5
As a result, modern services, such as IT,
telecommunications, finance, and professional
& business services, have emerged as capital-
intensive, globally tradable, and productivity-
enhancing sectors. These industries are
increasingly embedded in global value chains,
taking on roles that were once exclusive to
manufacturing. Bhagwati’s (1984) ‘splintering’
hypothesis had anticipated this shift, describing
how services could become “disembodied”
from production sites and delivered remotely.
Today, such sectors not only demonstrate
economies of scale and technological
dynamism but are also deeply integrated
with cross-border trade and investment flows.
Their growing importance in India’s trade is
evident: in FY 2024–25, merchandise exports
(excluding petroleum products) rose by 6.0%
to a record USD 374.1 billion, while services
exports surged by 13.6% to USD 387.5 billion,
pushing total exports to an unprecedented
USD 824.9 billion, a 6.01% increase over FY
2023–24 (PIB, 2025).
Despite this transformation, the services sector
remains highly heterogeneous, comprising a
wide range of activities with varying levels of
capital intensity, digital adoption, tradability,
and productivity. At one end of the spectrum
are high-value, globally integrated services,
such as IT, financial services, analytics, and
R&D, that are real growth engines. While,
at other end lie traditional services such as
retail, transport, hospitality, and personal care,
which are often informal, labour-intensive, and
regional, are low value added.
This diversity within the services sector
carries important implications for structural
transformation, particularly in a large and
demographically varied country like India.
Uneven growth across service subsectors
can widen spatial and institutional disparities,
thereby limiting the inclusiveness and
long-term sustainability of a services-led
development model (Ghani & Kharas, 2012;
Shingal, 2014).
The heterogeneity of the services sector
is especially evident across Indian states,
both in terms of scale and structure. States
such as Karnataka, Maharashtra, Tamil Nadu,
and Telangana have developed globally
competitive hubs anchored in high-value,
tradable, and knowledge-intensive services
such as IT, finance, professional services, and
digital platforms. Collectively, they contributed
around 40% of India’s total services output in
2023-24.
In contrast, several other states continue
to rely on traditional, low-productivity
services, often characterized by informality
and limited scope for scalability. These
regions face structural challenges such as
inadequate digital infrastructure, skill gaps,
and institutional constraints which hinder their
ability to transition into more dynamic service
economies. The uneven spatial diffusion of
service-led growth highlights the need for
region- specific development strategies.
This report builds upon the Pant et al (2024),
which explored the potential of services to
transform the Indian economy across three key
dimensions, viz., output/GVA, employment,
and exports. This report extends the output/
GVA dimension further, offering a detailed
examination of India’s economic evolution
through the lens of structural transformation at
both the national and sub-national levels. With
the services sector emerging as the primary
engine of growth, a key analytical focus is
whether states that initially had a lower share
of services in GVA are beginning to converge
with more advanced states. Beyond variations
in income levels, the analysis investigates
whether structurally lagging states are now
undergoing transformation through a more
rapid growth in services. Understanding these
dynamics is essential for fostering regionally India’s Services Sector: Insights from GVA Trends and State-Level Dynamics 6
balanced development and designing policy
interventions that ensure inclusive progress
across all states.
More specifically, the report explores the
following key questions related to India’s
services sector: (a) How has India’s economic
structure changed over time, especially in the
shift from agriculture and industry towards
services? (b) What are the main patterns in the
services sector growth across Indian states,
and how do contributions vary by subsector
and region? (c) Which states are emerging
as leaders in high-value services, and which
remain concentrated in low-value, traditional
services? (d)Are states with low services shares
now growing faster in this sector, suggesting
signs of catch-up and regional convergence?
(e) What sector and state specific policy
recommendations emerge from the analysis?
This report begins by examining the shift in the
economy’s composition, from agriculture and
industry to services, with a special focus on
the growing role of the services in generating
value. The analysis explores both sectoral and
sub-sectoral patterns. By comparing state-level
experiences, the report seeks to understand
whether this transformation is occurring evenly
across the country or whether it remains
concentrated in a few advanced regions.
Together, this report aims to build a
comprehensive assessment of whether
India’s services sector is facilitating an
inclusive and regionally balanced structural
transformation. It assesses the extent to which
this transformation aligns with the broader
development vision of Viksit Bharat @2047.
This report is organized as follows. Section 1
presents the introduction and motivation for
examining India’s structural transformation.
Section 2 outlines the global context,
highlighting international patterns in sectoral
shifts. Section 3 examines national trends
in services growth and resilience including
sub-sectoral dynamics using a concordance-
based classification as developed in the
aforementioned NITI Aayog Working Paper
(Pant et al. 2024). Section 4 provides a detailed
state-level analysis of services composition
and disaggregated analysis. Section 5 explores
the relationship between per capita income
(PCI) and services share across states. Section
6 analyses the regional level inclusivity of
services using convergence. Section 7 outlines
strategic priorities and policy options to
support inclusive and regionally balanced
services-sector development. Section 8
concludes the report. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics7
Over the past two decades, the global economy
has undergone a marked structural reorientation,
with services emerging as the preeminent
contributor to global output. Notably, services
consistently accounted for nearly 67–68% of
global GVA from 2000 to 2023, with minimal
variation. In contrast, the share of industry
declined marginally from 28.3% in 2000 to
27.2% in 2023, while agriculture, already a minor
component, remained around 4.4% in recent
years (See Figure 2.1). This pattern reflects a
long-term global pattern wherein production,
consumption, and trade are increasingly
concentrated in service activities.
Figure 2.1: Global Sectoral Composition of Value Added (% Share, 2000-2023)
Note
1:
The stacked bar chart shows the global sectoral distribution of value added (% share) from 2000 to 2023. Agriculture,
hunting, forestry & fishing (green), Industry (red), and Services (blue) are presented as a share of total value added. Services
dominate throughout, while agriculture remains the smallest contributor. Industry includes mining, manufacturing, utilities,
and construction. Services cover ‘Wholesale, retail trade, restaurants & hotels’, ‘Transport, storage & communications’ &
‘Other Activities’.
Source: Author’s illustration based on UNCTAD Datahub, GVA at constant 2015 prices.2
Global Context: Sectoral Composition
and Structural Transformation
1 Sectoral shares are calculated by summing GVA values for the three main sectors, ‘Agriculture, hunting, forestry,
fishing’, ‘Industry’, and ‘Services’, to obtain total GVA, since these may not add up to the ‘Total Value Added’ figures
provided on UNCTAD Datahub. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics 8
Figure 2.2: Sectoral Value Added – World, Developing & Developed Economies (2000 & 2023)Note: This chart compares the size and global share of value added by sector; Agriculture (green), Industry (red), and Services (blue) across the world, developing, and
developed economies for 2000 and 2023. The bar graphs show the value of each sector in USD trillion. Semi-circle charts above the bars show how much each region
contributes to the world total for that sector. The table below shows the annual growth rate (Y-o-Y) of each sector.
Source: Author’s illustration based on UNCTAD Datahub, GVA at constant 2015 prices. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics9
Between 2000 and 2023, the global economy
witnessed substantial expansion in sectoral
value-added across agriculture, industry, and
services. This growth reflects not only increased
output but also broader structural shifts. A
comparative performance of developed and
developing economies is illustrated in Figure 2.2,
with sectoral data presented for the years 2000
and 2023.
In developing economies, agricultural value-
added rose from USD 1.48 trillion in the year
2000 to USD 3.28 trillion in 2023, indicating
continued, though declining, reliance on primary
sectors. Industrial output nearly tripled, growing
from USD 4.07 trillion to USD 12.94 trillion,
reflecting moderate industrialization. The most
notable shift occurred in the services sector,
where value-added surged from USD 6.10 trillion
to USD 21.42 trillion. This trend highlights the
increasing dominance of services in emerging
markets, particularly in Asia and Latin America,
driven by technological adoption, urbanization,
and expanding consumer demand (World Bank,
2019).
In contrast, developed economies showed a
more stable growth pattern. Agricultural value-
added increased slightly from USD 0.56 trillion
to USD 0.70 trillion, reaffirming its minimal
role in high-income context. Industrial growth
remained moderate, rising from USD 9.20 trillion
to USD 11.38 trillion. The services sector remained
the dominant contributor, with value-added
increasing from USD 25.51 trillion to USD 39.74
trillion. However, developed economies’ share
in global services output declined, reflecting
the rising contribution of developing nations to
global value creation.
Building on the earlier discussion of global and
regional service-led structural transformation,
the income-based disaggregation in Figure
2.3 further highlights the uneven pace of
progress across developing economies. It
compares value added across ‘Agriculture,
hunting, forestry, fishing’, ’Industry’, and
‘Services’ for high-income (such as China,
Mauritius, Singapore, Mexico), middle-income
(such as India, South Africa, Philippines), and
low-income developing economies (such as
Afghanistan, Pakistan, Myanmar) in 2000 and
2023, revealing distinct structural patterns.
While the overall increase in ’Agriculture,
hunting, forestry, fishing’ is notable, the relative
distribution remains largely unchanged. High-
income developing economies continued to
dominate the sector, contributing over 54% of
agricultural value added in both years. Middle-
income economies held a stable share of around
35–36%, while low-income economies’ share
declined from 9.7% to 8.8%.
In the industrial sector, although total value
added across developing economies nearly
tripled between 2000 and 2023, the gains
remained highly concentrated. High-income
developing economies increased their share from
70.4% to 77.8%, a shift primarily driven by China’s
extraordinary industrial expansion. Over the past
two decades, China has undergone one of the most
significant episodes of structural transformation
in the world. Its rapid industrialisation was enabled
by a combination of large-scale infrastructure
investment, a consistent export-led development
strategy, integration into global value chains,
and institutional reforms that supported
productivity growth and capital accumulation
(Lin, 2011; Brandt, Rawski & Sutton, 2008; World
Bank, 2020; Herrendorf, Rogerson & Valentinyi,
2014). Whereas, countries such as Singapore
and Mauritius exemplify successful transitions
toward services-intensive growth, achieved
through long-term investments in human
capital, strategic infrastructure development,
and proactive integration into global trade and
financial systems. Their experiences illustrate
how small, open economies can leverage services
particularly finance, tourism, and ICT as engines
of structural transformation and competitiveness
(Wells, 1999; Subramanian, 2009; Lim, 2015). India’s Services Sector: Insights from GVA Trends and State-Level Dynamics 10
Figure 2.3: Structural Shift by Income Group in Developing Economies (2000 vs. 2023)Note: This chart compares the size and global share of value added by sector; Agriculture (green), Industry (red), and Services (blue) across the developing economies and
its income group classification - low-, middle-, and high-income developing economies for 2000 and 2023. The bar graphs show the value of each sector in USD trillion.
Semi-circle charts above the bars show how much each income group contributes to the developing economies’ total for that sector. The table below shows the annual
growth rate (Y-o-Y) of each sector.
Source: Author’s illustration based on UNCTAD Datahub, GVA at constant 2015 prices. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics11
In contrast, many middle-income countries
such as India, Indonesia, South Africa, and
the Philippines, have experienced partial
transformation. While India, for example,
has achieved notable growth in services,
its industrial base remains comparatively
low (Eichengreen & Gupta, 2013). South
Africa and the Philippines continue to face
structural rigidities, with industrial stagnation
or deindustrialization pressures and limited
integration into high-value-added services
(Rodrik, 2016). These economies illustrate a
broader challenge often referred to as the
“middle-income trap”, where productivity
gains slow down before reaching high-income
thresholds.
In the case of services, the distribution remained
heavily skewed, high-income developing
economies continued to account for over
74–76% of total services value added. Middle-
income economies, despite only marginal
absolute gains, saw their share decline slightly
from 22% in 2000 to 21.5% in 2023, while the
share of low-income economies fell from 3.2%
to 2.6%. This indicates that while services-
led growth is gaining momentum globally, its
impact within the developing world is highly
uneven, with the lowest-income economies
failing to integrate meaningfully into the
services-driven growth.
In the case of low-income developing
economies including Afghanistan, Myanmar,
and several Sub-Saharan African nations,
structural transformation remains limited
and slow. Their economies are still heavily
dependent on low-productivity agriculture
and resource-based industries, with minimal
progress toward industrialization or tradable
services (UNCTAD, 2023).
Taking the case of middle-income economies
forward, India stands out as the most prominent
and dynamic example of services-led structural
transformation. As seen in Figure 2.4, India has
climbed ten positions, from 17th in 2000 to 7th
in 2023, marking one of the largest upward
shifts among all major economies. Its services
sector value added rose from USD 0.33 trillion
in 2000 to USD 1.6 trillion in 2023, registering
an impressive absolute increase of USD 1.27
trillion. This surge not only outpaces traditional
high-income countries like Italy, Canada, and
Australia in value terms but also underscores
India’s transition from a peripheral to a core
actor in the global services economy. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics 12
Figure 2.4: Top 20 Economies as per Service Sector Value Added (2023)
Note: This table ranks the top 20 global economies based on their services sector value added (in USD trillion) for 2023 and
compares their rank and value change since 2000. Columns indicate each country’s current and past rank, rank movement,
value in 2023 and 2000, and absolute value gain over the period. India has shown the highest jump in rank from 17th to 7th,
reflecting strong services-led growth.
Source: Author’s illustration based on UNCTAD Datahub, GVA at constant 2015 prices.
Among developing and middle-income
nations, India is now the leading contributor
to global services growth, driven by strengths
in IT, business services, finance, and a
rapidly expanding digital ecosystem. This
transformation exemplifies how emerging
economies can leapfrog traditional industrial
pathways, using services as the primary engine
of growth, employment, and global integration. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics13
3.1 Sectoral Trends in GVA (2011-12
to 2023–24)
Over the past three decades, India has
undergone a significant transformation in the
structure of its economy. Unlike the traditional
development path observed in advanced
economies, where growth typically progresses
from agriculture to industry and subsequently
to services, several developing countries,
have experienced a shift towards services-led
growth. However, the scale and early timing
of this transformation have been particularly
pronounced in India. This different pattern has
questioned traditional views in development
economics and has led to a new development
model, where the services sector plays a
central role in economic change.
To capture long-term structural shifts, the
sectoral composition of GVA has been
averaged over 2011–12 to 2023–24 (see Table
3.1). The data shows a steady decline in the
primary sector’s share, falling from 21.1% in
2011-14 (2011-12 to 2013-14) to 16.7% in 2023–
24. This is consistent with the standard pattern
of development, where the relative weight of
agriculture and related activities diminishes as
the economy diversifies.
However, the trend in India’s industrial sector
departs from conventional expectations.
The secondary sector, which includes
manufacturing, construction, and utilities, has
remained broadly stable, confined to the slim
range of 28% to 29% over the same period.
This indicates limited structural momentum,
despite sustained policy emphasis on industrial
growth. Panagariya (2008) draws attention to
this pattern, describing it as a “puzzle,” wherein
industry, rather than expanding rapidly as in
other emerging economies, shows stagnation
even as overall GDP growth accelerates.3
Services-Led Structural Transformation
in India
2
Table 3.1: Average Sectoral Composition of GVA (% share, 2011-12 to 2023-24)
3
Sector
2011-12 to
2013-14
2014-15 to
2016-17
2017-18 to
2019-20
2020-21 to
2022-23
2023-24
Primary21.1 18.7 17.6 18.1 16.7
Secondary28.8 28.4 28.2 28.6 28.8
Services50.1 52.9 54.2 53.3 54.5
Total GVA 100.0100.0100.0100.0 100.0
Source: GVA at constant prices (2011-12), National Accounts Statistics 2025, MoSPI
2 This section is based on sector-level GVA data from National Accounts Statistics 2025, MoSPI, covering the reference
period 2011–12 to 2023–24.
3 According to the Ministry of Statistics and Programme Implementation (MoSPI), the ‘Primary’ sector includes
‘Agriculture, Hunting, Forestry and Fishing’ and ‘Mining and Quarrying’. The ‘Secondary’ sector covers ‘Manufacturing’,
‘Construction’, and ‘Electricity, Gas, Water Supply & Other Utility Services’. The ‘Tertiary’ sector encompasses a wide
range of activities, including ‘Trade, Repair, Hotels and Restaurants’; ‘Transport, Storage, Communication & Broadcasting
Services’; ‘Real Estate, Ownership of Dwellings & Professional Services’; ‘Public Administration’; ‘Financial Services’;
and ‘Other Services’. Throughout this report, the ‘Tertiary’ sector is referred to as the ‘Services’ sector. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics 14
In contrast, the services sector has increased
its share from 50.1% to 54.5%, underscoring its
growing role as the dominant contributor to
GVA and the primary driver of structural change.
Panagariya (2008) explains that this early
and robust expansion of services, particularly
modern services such as Information Technology
(IT),
finance, and communications, has been a
key feature of India’s distinct growth pattern.
Unlike East Asian economies that experienced
manufacturing-led growth, India’s transformation
has been services-led, with high-skilled urban
employment and export-oriented services driving
growth.
This trend reflects what Panagariya terms a
“dual divergence”- industry failing to take off as
expected, and services exceeding
conventional projections for a country at
India’s income level. The resulting structural
transformation is therefore unbalanced,
characterized by a lagging industrial base and
a booming services sector, raising concerns
about employment absorption and inclusive
growth. Nevertheless, it highlights the
adaptability of India’s economy, leveraging
human capital and technological
capabilities to drive growth in a non-
traditional sectoral sequence.
This
shift is clearly reflected in the
sectoral distribution presented in Figure 3.1.
The overall share of services in G
VA
(represented in shades of blue) has increased
over from 48.9% in 2011-12 to 54.5% in 2023-24.
Within the services sector, categories such as
‘Real estate, ownership of dwelling &
professional services’ and ‘Trade, repai
r,
hotels and restaurants’ have had the highest share in the overall GVA. The share
of ‘Real estate, ownership of dwelling &
professional services’ increased steadily from
13.0% in 2011–12 to 1
7.6% in 2023–24, while
‘
Trade, repair, hotels and restaurants’ rose
from 10.9% to 12.4% over the same period.
‘Financial services’ has also maintained a
stable
and significant presence, fluctuating
around 6% in most years.
In contrast, the primary sector saw decline across
both its subsectors: the share of ‘Agriculture,
hunting, forestry, and fishing’ decreased from
18.5% in 2011–12 to 14.7% in 2023–24, while ‘Mining
and quarrying’ registered a modest contraction
from 3.2% to 2% over the same period. The
‘Manufacturing’ sector remained relatively stable,
fluctuating between 17% and 18.5% across the
years. ‘Electricity, gas, water supply, and other
utility services’ maintained a nearly constant
share, increasing slightly from 2.3% to 2.4%
Meanwhile, the ‘Construction’ sector experienced
a mild decline, reducing its share from 9.6% to
8.9%.
This pattern aligns with a growing body of
literature on structural transformation in
developing economies. Rodrik (2016), among
others, has highlighted the phenomenon of
“premature deindustrialization,” wherein countries
begin to transition away from manufacturing
at significantly lower income levels than those
recorded during the industrialization phase of
advanced economies. Other countries that have
experienced similar pattern include Brazil and
South Africa, where manufacturing peaked early
& gave way to increasing dominance of services,
without full benefits of industrial expansion
(Rodrik, 2016). India’s experience also aligns
with this broader trend, albeit with distinct
characteristics. Although the manufacturing
sector has not experienced a sharp decline, its
stagnant share, implies persistent structural
constraints, including limited domestic demand,
slow employment growth (Rodrik,2016).
In contrast, the services sector, driven especially
by its high-productivity, tradable segments such
as IT, financial services, and Business Process
Outsourcing (BPOs), has emerged as the primary
engine of growth. Enabled by what Ghani &
Kharas (2012) refers to as the “3Ts” (technology,
transportability, and tradability), these subsectors
have increasingly assumed roles traditionally
occupied by manufacturing in classical models of
structural transformation. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics15
Figure 3.1: Sectoral Decomposition of GVA in India (% Share, 2011–12 to 2023–24)Notes: This stacked bar chart shows the annual share of major sub-sectors within the primary, secondary, and services sectors in India’s GVA at constant prices.
Source: Author’s depiction based on GVA at constant prices (2011-12), MoSPI
4
4 Unlike UNCTAD, which classifies ‘Mining’ under the industrial sector along with ‘Manufacturing’ and ‘Utilities’, MoSPI groups ‘Mining and Quarrying’ with ‘Agriculture,
hunting, forestry, and fishing’ under the ‘Primary’ sector. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics 16
3.2 Sectoral Growth Volatility and
Service Sector Resilience
While structural transformation is
conventionally assessed through shifts in
the sectoral composition of output, a deeper
analysis requires attention to the temporal
stability and responsiveness of sectoral
growth. Volatility across sectors, particularly
in response to exogenous shocks, is a critical
indicator of economic resilience and reflects
the depth of structural transformation. In the
Indian context, year-on-year (Y-o-Y) GVA
growth from FY2012–13 to FY2023–24, as
shown in Figure 3.2, reveals that services are not
only dominant in output composition but have
also emerged as the most stable and adaptable
contributor to overall growth. This stands in
stark contrast to the erratic performance of
the primary sector and the cyclical fluctuations
observed in the secondary sector.
During the period from FY2012–13 to FY2015–16,
GVA growth displayed a rising trend, increasing
from 5.4% in FY2012–13 to a peak of 8.03%
in FY2015–16. This upward momentum was
supported by a combination of macroeconomic
stability, low inflation, declining global crude
oil prices, and improved public investment.
These factors helped strengthen consumption
demand and set the stage for a modest
recovery in economic sentiment during this
period (Economic Survey, 2016-17). This was
followed by a moderation phase and a sharp
contraction of -4.15% in FY2020–21 due to the
COVID-19 pandemic’s related shocks. Growth
subsequently rebounded to 8.56% in FY2023–
24, driven by strong momentum in the services
sector and normalization of economic activity.
The primary sector, heavily influenced by
monsoonal variability and international
commodity prices, exhibited significant volatility.
Growth declined from 1.36% in FY2012–13 to
1.18% in FY2014–15, with intermittent recoveries
shaped by seasonal conditions. During the
pandemic, the sector demonstrated relative
insulation, posting 2.33% growth in FY2020–21,
aided by its rural orientation and classification
as an “essential sector.” However, the recovery
remained subdued, with growth reaching only
5.9% in FY2022–23 and then falling again in
the subsequent year to 2.73%. These outcomes
highlight enduring structural challenges,
including relatively low agricultural productivity
compared with global benchmarks inadequate
irrigation coverage, and limited diversification.
This trend aligns with established patterns in
transitioning economies, where agriculture’s
output share contracts more rapidly than its
employment share, resulting in persistent
productivity differentials (Lewis, 1954; Timmer,
2007).
The secondary sector, which comprises
manufacturing, construction, and utilities, in
turn displayed cyclical growth patterns, closely
tied to investment cycles and external demand.
Growth rose from 3.56% in FY2012–13 to a peak
of 9.52% in FY2015–16, supported by industrial
recovery and increased public investment
(Economic Survey 2016-17). However, it
declined to –1.26 % in FY2019–20, even before
the pandemic, reflecting a slowdown driven
by weakening demand and financial sector
stress. A strong post-COVID rebound of 12.73
in FY2021–22 followed, driven by base effects
and pent-up demand, falling to 2.42% in the
subsequent year and then increasing to 11.4%
in 2023-24. This volatility can be attributed to
the unprecedented global shocks such as the
pandemic and geopolitical tensions (Economic
Survey 2022–23). India’s Services Sector: Insights from GVA Trends and State-Level Dynamics17
Figure 3.2: Annual Sectoral Growth Trends in India (% YoY, 2012–13 to 2023–24)
Note: Yellow bars represent overall GVA growth. Lines indicate sectoral trends: green (Primary), red (Secondary), and blue
(Services). The chart captures growth fluctuations, with a sharp dip in 2020–21 and peak recovery in 2021–22.
Source: Author’s calculation based on MoSPI, GVA at constant 2011–12 prices
In contrast, the services sector has emerged as
both a high-growth and low-volatility anchor
of India’s macroeconomic performance. It grew
by 8.33% percent in FY2012–13, accelerated to
9.81% in FY2014–15, and remained within the
6.4–9.4% range till FY2019–20. Even during
the pandemic, when the sector contracted by
–8.35% largely due to disruptions in contact-
intensive services, it demonstrated exceptional
resilience, rebounding with 9.18% growth in
FY2021–22 and settling at 8.9% in FY2023–
24. This recovery was supported by robust
expansion in digitally delivered services,
e-commerce, logistics, and IT-enabled services,
which remained competitive globally and
leveraged remote delivery and platform-based
business models (World Bank & WTO, 2023;
NASSCOM, 2022).
The sustained resilience of India’s services
sector, especially in the aftermath of systemic
shocks such as the COVID-19 pandemic, is
widely attributed to the sector’s increasing
reliance on digitally enabled delivery models,
low dependence on physical infrastructure, and
its integration with global demand for remote
and intangible services. This was evident in the
rapid post-pandemic rebound of IT, finance,
and business services, which benefited from
codified knowledge systems and platform-
based coordination mechanisms (Evenett,
2020; Beirne et.al, 2022). These characteristics
rendered the sector more agile and less
susceptible to the physical and logistical
disruptions that constrained agriculture and
manufacturing.
3.3 Sectoral Composition of Services:
Sub-Sectoral Growth Trends
Having established the importance of services
in India’s structural transformation, both in
terms of rising output share and resilience, it
becomes essential to move beyond aggregate
figures and examine the composition of the
sector itself. As highlighted by Nayyar (2012)
and Bhagwati (1984), understanding the
character of services and their potential as
engines of inclusive development requires a
disaggregated approach. It is not sufficient
to treat services as a singular driver of
transformation, we must distinguish between
high-growth, productivity-enhancing services
that contribute to structural transformation India’s Services Sector: Insights from GVA Trends and State-Level Dynamics 18
and low-productivity, informal segments that
remain constrained by demand, scale, and
infrastructure limitations. Without this clarity,
policy interventions risk being too generalized
to address the sector’s internal asymmetries.
While the aggregate trends offer compelling
evidence of the services sector’s contribution
to India’s growth, they also obscure significant
heterogeneity. Services are not a homogenous
block but a diverse ecosystem, encompassing
both high-productivity, tradable segments and
low-value, informal activities. This variation
holds important implications for how services
shape structural change, employment, and
inclusion. To fully grasp this complexity, it is
crucial to move beyond broad sectoral analysis
and adopt a disaggregated lens.
This report addresses the sectoral and sub-
sectoral diversity of services by using a novel
concordance of 15 service sub-sectors (see
Table 3.2 & 3.3). First developed in the NITI
Aayog Working Paper by Pant et al. (2024),
the concordance provides a heuristic mapping
of GVA, employment, and export data
across sub-sectors. This classification offers
a granular view of the internal dynamics of
India’s services economy, tracking GVA levels,
growth trajectories, and sectoral shares.
The report presents a more detailed
disaggregation of the Ministry of Statistics
and Programme Implementation’s (MoSPI) six-
category services GVA framework, aligning
it with 15 analytically distinct ‘Concordance
sectors’
5
. While the official classification groups
diverse activities under broad composites, such
as “Trade, Hotels, Transport, Communication,
and Services Related to Broadcasting”, the
15 sub-sector concordance breaks these into
sharper sub-sectoral categories. This finer
granularity enables a more nuanced analysis of
growth patterns, volatility, and policy relevance
revealing, for example, how high-performing
telecom services diverge from underperforming
postal activities, or how globally tradable IT
services differ structurally from localized trade
segments.
Over the last decade, the clearest story of
transformation has come from the ‘Computer
and Information Services’ segment. This
subsector’s GVA increased nearly fourfold from
₹2.4 trillion in 2011–12 to ₹10.8 trillion in 2023–
24, marking one of the most consistent growth
trajectories across the economy (see Table 3.2).
Its share in total services GVA rose from 6%
to 12.2%, surpassing several other subsectors.
These trends reinforce India’s global leadership
in software exports, digital platforms, cloud
computing, and IT-enabled services areas that
have become cornerstones of both domestic
value addition and external competitiveness.
Notably, year-on-year growth remained in
double digits even in the post-pandemic
period, reflecting the subsector’s adaptability
and sustained global demand. And the recent
rise of Global Capability Centres (GCCs) has
quietly contributed to output growth and
improved global positioning (NASSCOM,
2024).
One of the largest individual sub-sectors
with a GVA share is ‘Professional, Scientific,
Other Business Services’ which includes R&D,
legal, consulting, technical services and real
estate, consistently contributes around 20%
of total services output. From ₹8.1 trillion in
2011–12 to ₹ 17.7 trillion in 2023–24, its stable
share underlines the rising role of knowledge-
intensive services in enabling investment,
productivity, and global integration across
sectors.
‘Trade and Repair’, a sector rooted in retail
networks and informal employment, remains
one of the largest contributors to services
GVA, growing from ₹7.9 trillion to ₹18 trillion.
Despite its robust size and a strong recovery
5 Concordance refers to the systematic mapping of MoSPI’s six broad service categories into 15 disaggregated sub-
sectors, using heuristic mapping approach. This exercise provides greater sectoral granularity, enabling more precise
analysis of growth patterns, structural transformation, and policy relevance within the services economy India’s Services Sector: Insights from GVA Trends and State-Level Dynamics19
after the pandemic, its growth is closely tied
to domestic consumption and is vulnerable
to informal sector disruptions. ‘Transport’
services grew in absolute terms but saw a
declining share in overall GVA from 10.2% to
8.1%, reflecting relative underperformance. A
sharp contraction of –23% in 2020–21 during
COVID-induced lockdowns exemplifies the
sector’s exposure to physical and mobility
constraints (see Table 3.3).
Among the hardest hit by the pandemic
was the ‘Travel’ sector, which contracted
by nearly 54% in 2020–21. While the sector
staged a dramatic recovery post COVID-19, its
overall contribution to services GVA remains
around 2%. This affirms both its vulnerability
to exogenous shocks and its strong cyclical
dependence on discretionary income and
mobility.
The ‘Financial Services’ sub-sector has
demonstrated sustained expansion over the
past decade, with its gross value rising from
₹4.1 trillion in 2011–12 to ₹8.8 trillion in 2023–
24. Although its relative share in the services
sector declined marginally from 10.4% to
10.0%. Closely linked, the ‘Insurance and
Pension’ services sub-sector expanded from
₹0.66 trillion to ₹0.96 trillion over the same
period. However, it exhibited pronounced
volatility, with robust double-digit growth in
the early 2010s (17.5% in 2012–13 and 18.2% in
2014–15), followed by a contraction of –7.9%
in 2023–24. This trend suggests that while the
sector experienced accelerated growth during
and immediately after the pandemic, driven
by heightened demand for health and asset
protection products.
Some services have shown marked volatility
and sectoral stress. ‘Telecommunications’,
once a high-growth frontier, experienced a
mid-decade decline due to disruptive pricing
and intense competition. However, the sector
gained back post-2020, aided by factors
such as data demand, rural penetration, and
renewed infrastructure investments. ‘Audio-
Visual and Related Services’, though relatively
small in GVA terms, captured the digital
consumption shift through OTT, gaming, and
content platforms, highlighting the rising
economic value of India’s cultural and creative
industries (FICCI & EY, 2024).
The pandemic also accelerated digital
adaptation in ‘Education’ and ‘Health’
services. Education saw a steady rise in GVA
from ₹2.7 trillion to ₹6.5 trillion, supported
by the growth of ed-tech platforms, blended
learning models, and increased public-private
investment. Health sector, too, has grown from
₹1.1 trillion to ₹2.5 trillion, and while its GVA
share has remained modest, the pandemic
revealed its systemic importance and the need
for expanded capacity and public investment.
Other subsectors, such as ‘Postal and Courier
Services’, have gained strategic relevance,
especially with the expansion of e-commerce,
logistics, and rural delivery. The sector’s
contribution doubled over the decade,
underscoring the role of service infrastructure
in facilitating inclusive growth. Meanwhile,
‘Personal, Cultural, and Recreational
Services’, though small, reflect emerging
consumption patterns in urban India. After a
sharp contraction of –38.6% in 2020–21, the
sector rebounded by 14.7% in 2023–24.
Finally, ‘ Government services (n.i.e.)’, which
includes public administration, defence, and
essential services, grew from ₹4.9 trillion to ₹ 8.5
trillion, with the share staying around 9.6%–12%. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics 20
Table 3.2: Sectoral Trends of 15 Concorded Services’ Sub-Sectors (Triennial Data) - Value (in
INR Trillion) & % Share in Services GVA
6
Category
Value (% Share)
2011-122014-152017-182020-212023-24
Trade & Repair
7.94
(20.0)
10.38
(20.4)
14.36
(22.4)
13.68
(20.4)
17.97
(20.4)
Professional, scientific, other business
services (including R&D, & real estate)
8.13
(20.5)
10.75
(21.2)
12.39
(19.3)
13.49
(20.1)
17.65
(20.0)
Computer & Information services
2.38
(6.0)
3.71
(7.3)
5.70
(8.9)
7.81
(11.6)
10.77
(12.2)
Financial Services
4.14
(10.4)
5.36
(10.6)
6.39
(9.9)
7.24
(10.8)
8.77
(10.0)
Government n.i.e.
4.91
(12.4)
5.44
(10.7)
6.77
(10.5)
7.58
(11.3)
8.49
(9.6)
Transport
4.04
(10.2)
4.96
(9.8)
6.02
(9.4)
4.94
(7.4)
7.10
(8.1)
Education
2.68
(6.7)
3.21
(6.3)
4.28
(6.7)
4.83
(7.2)
6.50
(7.4)
Health
1.10
(2.8)
1.40
(2.8)
1.76
(2.7)
1.96
(2.9)
2.54
(2.9)
Personal, cultural & Recreational services
1.41
(3.6)
1.81
(3.6)
2.15
(3.3)
1.48
(2.2)
2.27
(2.6)
Travel
0.90
(2.3)
0.98
(1.9)
1.32
(2.1)
0.71
(1.1)
2.02
(2.3)
Telecommunications
0.89
(2.2)
1.21
(2.4)
1.10
(1.7)
1.43
(2.1)
1.89
(2.1)
Insurance & Pension Services
0.66
(1.7)
0.91
(1.8)
0.90
(1.4)
1.00
(1.5)
0.96
(1.1)
AV & related services
0.20
(0.5)
0.36
(0.7)
0.62
(1.0)
0.50
(0.7)
0.62
(0.7)
Postal & Courier
0.17
(0.4)
0.19
(0.4)
0.27
(0.4)
0.28
(0.4)
0.34
(0.4)
Others
0.17
(0.4)
0.17
(0.3)
0.17
(0.3)
0.16
(0.2)
0.18
(0.2)
Services Sector
39.7
(100)
50.85
(100)
64.18
(100)
67.09
(100)
88.08
(100)
Note: Detailed table for the entire reference period is provided in Appendix A1.
Source: Authors’ concordance mapping based on MoSPI classification of GVA at constant 2011–12 prices.
6 In the National Accounts Statistics, Gross Value Added (GVA) by economic activity is initially calculated without
deducting Financial Intermediation Services Indirectly Measured (FISIM), which represents the implicit value of
banking and financial services consumed by various sectors. To avoid overstating the value added by users of financial
intermediation, FISIM is subsequently subtracted from each sector’s GVA. For certain sub-sectors such as Construction,
Computer & Information Services, Professional & Scientific Services (including R&D), Audio-Visual & Broadcasting,
Telecommunications, and Postal & Courier Services, the adjusted GVA was computed by deducting a weighted FISIM
component from the unadjusted GVA figures, as official statistics do not provide disaggregated FISIM data for these
individual sub-sectors. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics21
Table 3.3: Sectoral Trends of 15 Concorded Services’ Sub-Sectors (Triennial Data) - Rate of
Growth (in %)
Category
Y-o-Y Change (%)
2012-132014-152017-182020-212023-24
Trade & Repair12.0 10.2 13.2 -18.4 7.1
Professional, scientific, other business
services (including R&D, & real estate)
8.4 10.6 -0.5 -4.1 10.6
Computer & Information services13.2 17.1 3.1 10.4 12.2
Financial Services9.2 7.1 4.1 4.2 9.7
Government n.i.e.2.1 6.6 10.1 -0.6 5.7
Transport7.8 7.4 8.8 -23.0 5.1
Education5.5 7.1 11.6 -5.0 10.2
Health8.1 13.9 6.2 -3.3 11.7
Personal, cultural & Recreational services 6.9 12.5 -0.3 -38.6 14.7
Travel3.4 6.1 9.2 -53.8 18.7
Telecommunications6.3 13.0 -16.1 11.9 10.7
Insurance & Pension Services17.5 18.2 9.2 11.7 -7.9
AV & related services10.3 14.7 28.0 -19.0 6.3
Postal & Courier5.3 8.3 8.2 -5.7 3.8
Others1.4 0.8 0.9 -6.8 0.7
Services Sector8.3 9.8 6.3 -8.4 9.0
Note: Detailed table for the entire reference period is provided in Appendix A2.
Source: Authors’ concordance mapping based on MoSPI classification of GVA at constant 2011–12 prices.
3.4 Contribution of Services’ Sub-
Sectors to Overall GVA Growth
Building on the preceding discussion of sectoral
heterogeneity, it becomes imperative to move
beyond the share and examine the relative
contributions of individual service sub-sectors
to overall services growth. While aggregate data
reveals the growing dominance of the services
sector in India’s economy, it often conceals
the underlying drivers and low performers or
volatile components within it. The heatmap in
Figure 3.3 disaggregates the percentage point
contribution of 15 key sub-sectors (concorded)
to total services’ GVA for 2011-12 to 2023–24.
Each cell reflects the annual contribution of a
sub-sector, color-coded by relative magnitude
- green indicating high, yellow moderate,
and red low or negative contributions. The
analysis offers a contrast between structurally
transformative, modern services such as IT,
finance, and professional business services,
and more traditional, contact-intensive, or
informal sectors, including transport, trade,
and personal services.
One of the most consistent growth engines
across the entire period is ‘Computer &
Information Services’. Its contribution to
services GVA growth ranged from 0.29 to 2.01
percentage points. The impact was particularly
notable during 2015–16 when it accounted for
one-fifth (approx.) of the total annual services
sector growth. During the post-pandemic
recovery years (2021–22 to 2022–23), India’s
IT and digital services was driving services-led
structural transformation.
Similarly, ‘Professional, Scientific, Other
Business Services’ (including R&D, & real
estate) remained stable contributors (between
1.26 to 2.22 percentage points) in most India’s Services Sector: Insights from GVA Trends and State-Level Dynamics 22
Figure 3.3: Contribution of Services Sub-Sectors to Services GVA Growth (in Percentage Points, 2012–13 to 2023–24)Note
: The heatmap depicts the annual percentage point contributions of 15 concorded service sub-sectors to overall services GVA growth. Each cell’s colour represents the
relative magnitude of contribution for that year: red indicates the lowest, yellow the median, and green the highest. The classification is based on a concordance framework
developed from MoSPI data. The sum of all sub-sector contributions in each year equals the total services sector growth shown in the last column.
Source: Author’s depiction based on sectoral GVA at constant prices (2011-12 bae year), MoSPI India’s Services Sector: Insights from GVA Trends and State-Level Dynamics23
years, reflecting India’s growing presence in
knowledge-intensive sectors, urbanisation and
investment flows.
In contrast, ‘Transport’ and ‘Travel’ which is (both
demand and mobility-dependent) displayed
pronounced cyclical sensitivity. After moderate
positive contributions in the pre-pandemic
period, both recorded steep declines in 2020–21
likely due to (–2.02 and –1.13 percentage points,
respectively). However, ‘Transport’ rebounded
strongly in 2021–22 (1.99 percentage points),
even surpassing pre-COVID levels.
The ‘Trade & Repair’ sub-sector remained
among the largest single contributors. However,
in 2020–21 it also recorded the steepest single-
year contraction (–4.21 percentage points),
underscoring its exposure to consumption
shocks.
A few sub-sectors exhibited counter-cyclical
behaviour during the pandemic-induced
contraction of 2020–21. These included
‘Computer & Information Services’, ‘Financial
Services’, ‘Telecommunications’, and ‘Insurance
& Pension Services’, all of which posted positive
contributions despite the broader downturn.
Their resilience was driven by increased
dependence on digital infrastructure, remote
service delivery, and rising demand for risk
protection and connectivity. In contrast,
sub-sectors such as ‘Education’, ‘Health’,
and ‘Government Services (n.i.e.)’, often
viewed to be stable, registered marginally
negative contributions, revealing the depth
of pandemic-related disruption. ‘Education’
rebounded strongly in the recovery phase,
contributing 0.75 percentage points by 2023–
24, driven by institutional reopening and rapid
digital learning expansion.
‘Health’ and ‘Insurance & Pension Services’ also
gained post-pandemic relevance. Insurance
recorded its peak contributions in 2022–23
(0.31 percentage points), in line with broader
digital onboarding and risk awareness. Health
services contributed 0.33 percentage points in
2023–24, supported by increased investment
in public health infrastructure. Although
‘Personal, Cultural & Recreational Services’
had relatively smaller contributions in absolute
terms, they showed significant cyclical
fluctuation. The sector contracted by 1.27
percentage points in 2020–21 but recovered to
a positive 0.36 percentage point contribution
by 2023–24 surpassing its pre-COVID average.
This highlights its sensitivity to household
consumption and urban service revival.
Sub-sectors such as ‘Audio-Visual and Related
Services’, ‘Postal & Courier Services’ and ‘Others’
had relatively low contributions but revealed
important turning points. AV services, for
instance, experienced a sharp contraction during
the pandemic (–0.16 percentage points in 2020–
21), but recovered in subsequent years. ‘Postal
& Courier services’ & ‘Others’ though marginal
in absolute terms, steadily contributed to
services growth due to the e-commerce boom,
particularly in the last two years.
Overall, the heatmap reveals that India’s
services sector growth is not monolithic, but
rather the outcome of a complex interaction
among high-growth modern services, cyclical
traditional services. Another striking feature
of services sector growth in India is that high-
growth modern services such as ‘Professional,
Scientific, Other Business Services’, and
‘Computer & Information Services’ significantly
increased their contribution to overall services
growth in the country. While the relative
importance of Trade & Repair’, traditional
services sector, declined from 2.39 percentage
points in 2012-13 to 1.48 percentage points
in 2023-24. ‘Financial Services’ maintained a
constant position with a 0.96 percentage point
contribution. ‘Education’, ‘Health’, ‘Government
Services (n.i.e.)’, and ‘Telecommunications’
enhanced their contribution to India’s overall
services growth during the period under review.
These changes in the relative contribution of
various sub-sectors bodes well for growth, as
they suggest a consistent shift towards modern
growth-oriented services sectors. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics 24
The role of the services sector in India’s
economic transformation is not only evident
at the national level but also reflected in Indian
States and Union Territories (UTs). In this
section, a comparative analysis of state-wise
shares in national GVA for primary, secondary
and services sectors reveals the trends and
patterns.
4.1 Sectoral Composition of National
GVA at State Level: Primary,
Secondary, and Services Sector
Figure 4.1.A shows the distribution of state-
wise contribution to national GVA while the
other maps show state-wise distribution of
sectoral GVA. As illustrated in Figure 4.1.B,
the primary sector (green map) remains
highly concentrated in a few central and
western states, with Uttar Pradesh (11.36%),
Maharashtra (10.41%), Rajasthan (8.02%) and
Madhya Pradesh (7.82%) emerging as key
contributors to India’s primary sector GVA.
Figure 4.1.C (pink map) highlights the
secondary sector concentration in western and
southern India. Gujarat (13.53%), Maharashtra
(12.1%), and Tamil Nadu (10.98%) dominate the
sector, reflecting their established industrial
ecosystems, infrastructure readiness, and
proactive state-level industrial policies
In contrast, Figure 4.1.D, focused on services,
shows a distinct pattern. Maharashtra (15.52%),
followed by Karnataka (10.47%) and Tamil
Nadu (8.72%), are the largest contributors to
the services GVA. Notably, these states also
have relatively balanced contributions across
all sectors, suggesting more mature economic
structures.
4.2 Changing Pattern of Services
Contribution across States
The comparative analysis of state-wise services’
shares in Gross State Value Added (GSVA) over
the past decade reveals a clear and deepening
pattern of spatial economic transformation in
India (Figure 4.2). The period between 2011–12
and 2023–24 shows a marked increase in the
relative contribution of the services sector
across many Indian states/UTs, although with
significant regional variation. This reflects not
only national-level structural changes but also
the differentiated capacity of states/UTs to
integrate into a services-driven growth.
Southern states, particularly Karnataka, Kerala,
Tamil Nadu, and Telangana, have emerged
as the major service-intensive economies.
Karnataka’s share rose from 56.8% to 65.9%,
Kerala from 57.5% to 64.3%, Tamil Nadu from
50.5% to 51.7%, and Telangana from 52.8% to
62.4%. This transformation is driven by the
constant expansion of high-value services such
as IT, financial services, and knowledge-based
industries, supported by mature urban centres
like Bengaluru, Chennai, and Hyderabad.
Karnataka, Tamil Nadu, and Telangana have
distinctly positioned themselves as high-
performing service-intensive economies.
Karnataka leads with a deep specialization
in IT and digital services, Telangana follows
with rapid structural transformation driven by
innovation hubs and tech exports
8
, and Tamil
Nadu maintains a diversified urban services
base across finance, healthcare, and logistics
9
.4
The Services Sector across States/UTs:
A State-wise GVA Analysis
7
7 This analysis draws on (GSVA) data published by MoSPI as on 17.03.25 for the period 2011–12 to 2023–24. The services
sector is examined through eight sub-sectors, derived from MoSPI’s six-category classification of the Tertiary sector,
as shown in Figure 3.1.
8 See for details Socio-Economic outlook Telangana (2024)
9 See for details Economic Survey of Tamil Nadu (2023-24) India’s Services Sector: Insights from GVA Trends and State-Level Dynamics25
Figure 4.1: State-wise Shares in National Sectoral GVA (2023-2024)

A:
State-wise Shares in
Total National GVA
B:
State-wise shares
in Primary Sector’s
National GVA India’s Services Sector: Insights from GVA Trends and State-Level Dynamics 26
C:
State-wise shares in
Secondary Sector’s
National GVA
D:
State-wise shares in
Services Sector’s
National GVA
Note
10
: A, B, C & D illustrate state/UT’s share
in total national GVA, in Primary Sector’s
GVA (national level), in Secondary Sector’s
GVA (national level) & in Services Sector’s
GVA (national level), respectively. The darker
shades represent higher shares.
Source: Author’s depiction based on GSVA at
constant prices (2011-12), MoSPI.
10 Of the 34 States and Union Territories for which GSVA data is published by MoSPI, Ladakh has been excluded due
to unavailability of data (for 2023-24 at constant 2011-12 prices). Therefore, the term “National” in this context refers
to the aggregate of the 33 states and UTs considered henceforth. The state codes used correspond to the Regional
Transport Office (RTO) codes of the respective states and can be referenced in Appendix 3. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics27
Despite varying trajectories, all three states
are strategic leaders in India’s service-led
development, leveraging urban infrastructure,
digital ecosystems, and human capital
investments. Kerala, in contrast, has evolved
into a service-dominated economy where
growth is anchored in trade, tourism, real
estate, and financial intermediation, reflecting a
distinctive pathway of service-led development
that diverges from the IT-centric model of its
southern counterparts (Government of Kerala,
Economic Review 2024).
Similarly, Maharashtra presents a parallel
case, where the share of the services sector in
GSVA increased from 51.1% to 59.5%, reflecting
a structural shift led by the dominance of
Mumbai and Pune. These urban centres serve
as strategic hubs for high-growth services such
as finance, IT, logistics, and media. Mumbai
accounts for nearly 24% of India’s financial
services GVA, solidifying its position as the
financial capital of the country, while Pune
contributes significantly through a strong base
of IT parks and skilled talent (Government of
Maharashtra, 2024).
At the other end of the spectrum, states like
Odisha and Assam reflect a decline in services’
GSVA share, suggesting a limited transition
away from agriculture and extractive industries.
Odisha’s services share declined from 38.5% to
34.9%, while Assam fell sharply from 46.5% to
34.3%, possible underperformance in services
sector growth.
Meanwhile, north eastern states such as
Meghalaya, Manipur, and Nagaland have shown
gains in their services share, driven largely by the
expansion of public services, health, education,
and infrastructure investments under central
schemes. For instance, Meghalaya’s rise
from 44.7% to 63.2%, and Manipur’s increase
from 64.8% to 72%, illustrate the power of
state-level policy shifts and public sector-led
growth in transforming service output even in
geographically constrained economies.
Northern states display a more uneven trend.
While Delhi remains a consistent outlier with
services’ share rising from 83.4% to 85.5%
owing to its dense urban economy and its
increasing share in public administration, retail,
real estate and professional services. Similarly,
the states such as Punjab, Haryana, and Uttar
Pradesh show only moderate improvements.
Uttar Pradesh, for example, has moved from
45.5% to 47.9%, reflecting modest progress
and highlighting opportunities in urban service
delivery, digital public infrastructure, and Small
and Medium Enterprises (SME) integrations.
Western and central Indian states like Gujarat,
Chhattisgarh, and Madhya Pradesh continue
to demonstrate relatively lower levels of
service-sector share. These trends point to
the continued dominance of manufacturing,
mining, and resource-based sectors in these
states, and gradual diffusion of modern
services. Union Territories and smaller states,
including Andaman & Nicobar Islands and
Chandigarh, remain highly service-oriented
economies, with the services share reaching
up to 70.3% in Andaman & Nicobar Islands and
90.3% in Chandigarh in 2023–24. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics 28
Figure 4.2: Services Sector Share in GSVA (2011-12 & 2023-24)
2011-12
2023-24
Note
11
: The two Indian Choropleth maps contrast state/
UT’s service sector shares in their respective GSVA for
2011-12 & 2023-24.
Source: Author’s calculation based on GSVA at constant
prices (2011-12), MoSPI
11 The figure represents share of service sector in each state/UT’s GVA. For example, a share of 54.4% represents the
share of Jammu and Kashmir’s service sector in its own GSVA. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics29
4.3 State-wise Dynamics at
Disaggregated Services Sectors
This section analyses shifts in the contribution
of states to GVA across the eight services
sub-sectors: ‘Trade & Repair Services’,
‘Hotels & Restaurants’, ‘Transport & Storage’,
‘Communication & Services Related to
Broadcasting’, ‘Financial services’, ‘Real estate,
ownership of dwelling & professional services’,
‘Public Administration’ and ‘Other services.
Due to the unavailability of state-level data
for further bifurcation, the six categories,
as reported by MoSPI, could only be further
disaggregated to eight sub-sectors. The
section highlights change in the contribution
of states to each sub-sector, contrasted for
2011–12 & 2023–24 (see Figure 4.3).
At the all-India level, ‘Trade, and Repair’
contributed approximately 20.4% to the GVA
of the services sector in 2023-24, representing
the second largest share among all services
sub-sectors. The composition of the leading
ten states in this segment has remained
broadly consistent over time, with Maharashtra
retaining its position as the highest contributor
in both 2011–12 and 2023–24. The top
three positions also continue to be held by
Maharashtra, Gujarat, and Tamil Nadu, with an
exchange of positions between Gujarat and
Tamil Nadu during the period. Notably, Bihar
and Delhi, which featured among the top ten
states in 2011–12, have since been replaced by
Telangana and Haryana in 2023–24.
The ‘Hotels and Restaurants’ sector is the
smallest contributor among the eight services
sub-sectors under study, accounting for
approximately 2.3% of the services GVA at the
all-India level in 2023-24. Notable shifts were
observed in the composition of the top ten
states between 2011–12 and 2023–24. Tamil
Nadu ascended from third place to emerge as
the leading contributor, while Uttar Pradesh
advanced from fourth to second. Maharashtra,
which earlier held the top position, slipped to
third, and Karnataka moved from second to
fourth. Andhra Pradesh recorded a significant
improvement, rising from ninth to fifth position,
whereas Kerala continued to maintain its sixth
rank. Delhi and West Bengal also retained their
seventh and eighth positions, respectively.
Telangana was placed ninth in 2023–24, while
Rajasthan entered the top ten list for the first
time during the period. Bihar, which was part
of the top ten in 2011–12, dropped out of the
list in 2023.
The ‘Transport and Storage’ sector accounted
for approximately 8.1% of the services GVA
in 2023-24. The composition of the top ten
contributing states witnessed several changes
between 2011–12 and 2023–24. Maharashtra
continued to be the highest contributor in
both years. Uttar Pradesh advanced from
fourth to second position, Gujarat from eighth
to third, and Karnataka from seventh to fourth.
Telangana also moved up to the eighth position.
Tamil Nadu, earlier at second position, was
placed sixth in 2023–24. Delhi, which held the
third position in 2011–12, ranked fifth in 2023–
24. Andhra Pradesh, which ranked fifth in 2011–
12, moved to seventh. West Bengal moved
from sixth to ninth position. Bihar entered the
top ten in FY 2023–24.
‘Communication & Broadcasting Services’
accounted for approximately 3.2% of the
services sector GVA in 2023–24, representing
one of the smaller sub-sectors among the
eight under study. The composition of the
leading ten states in this segment has remained
broadly consistent over time. Maharashtra has
continued to retain the top position, while Uttar
Pradesh advanced to second place, resulting in
Tamil Nadu and West Bengal moving down by
one rank each. Rajasthan moved from seventh
to ninth position during the period. Bihar and
Madhya Pradesh entered the top ten in 2023–
24, replacing Delhi and Kerala, while Andhra
Pradesh maintained its position. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics 30
‘Financial services’ contributed approximately
11% to the services sector GVA at the all-India
level in 2023–24. The overall composition of
the leading contributors has remained broadly
stable over time. The top three positions also
continue to be held by Maharashtra, Tamil
Nadu and Delhi with an exchange of positions
between Delhi and Tamil Nadu during the
period. West Bengal slipped to seventh
position, resulting in Gujarat, Karnataka, and
Uttar Pradesh moving up by one rank each to
occupy the fourth, fifth, and sixth positions,
respectively. Andhra Pradesh and Rajasthan
entered the top ten list in 2023–24, replacing
Punjab and Madhya Pradesh, which were
present in 2011–12.
‘Real estate, ownership of dwelling &
professional services’ is the largest component
of service sector contributing 32.3% to
services GVA at the all-India level in 2023-
24. The composition of the top contributing
states remained broadly consistent over both
years, with most states retaining their relative
positions. Maharashtra continued to be the
leading state, followed by Karnataka, Tamil
Nadu, Uttar Pradesh, Delhi, and Telangana in
both years. Haryana advanced from the tenth
position to the seventh position, resulting in
West Bengal, Kerala, and Rajasthan moving
down by one rank each.
‘Public Administration’ accounted for around
9.6% of the services GVA at the all-India level
in 2023-24. The composition of the leading
contributors in this sector remained broadly
stable, with only limited reshuffling. The top
four positions continued to be held by Uttar
Pradesh, Maharashtra, Tamil Nadu and West
Bengal with an exchange of positions between
West Bengal and Tamil Nadu in 2023-24. Delhi
slipped from the fifth position to the seventh
position moving Gujarat and Madhya Pradesh
up by one position each. Karnataka also moved
up from ninth to the eighth position. Punjab
and Andhra Pradesh entered the top ten list in
2023–24 replacing Kerala and Rajasthan.
‘Other services’ sub-sector remained a mid-tier
contributor accounting for 13% of the services
sector GVA in 2023–24. The composition of the
top contributors witnessed notable changes
during the period. Maharashtra and Tamil
Nadu continued to hold the first and second
positions, respectively. Kerala and Uttar
Pradesh moved down in the rankings, while
West Bengal, Karnataka, Delhi, and Rajasthan
improved their positions in 2023-24. Bihar and
Punjab entered the list of top ten contributors
in 2023–24, replacing Andhra Pradesh and
Telangana. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics31
Figure 4.3: Share of Leading States/UTs across Service Sub-Sectors (2011-12 Vs 2023-24) India’s Services Sector: Insights from GVA Trends and State-Level Dynamics 32
Note: Top ten States/UTs for each of the eight sectors (authors’ classification) along with their respective shares are depicted. The figure further illustrates the disaggregation
of two sub-sectors: ‘Trade, Repair, Hotels and Restaurants’ into ‘Trade & Repair’ & ‘Hotels & restaurants’ and, ‘Transport, Storage, Communication & Services Related to
broadcasting’ into ‘Transport & Storage’ & ‘Communication & Services Related to broadcasting’.
Source: Author’s own calculation based on GSVA at constant prices (2011-12), MoSPI India’s Services Sector: Insights from GVA Trends and State-Level Dynamics33
The preceding section highlighted the
considerable variation in the contribution
of the services sector to GSVA across Indian
states and UTs. When examined alongside
the broader sectoral composition including
agriculture and industry, these patterns reveal
not only structural diversity but also underlying
differences in the nature of economic
transformation. In several states, the services
sector has emerged as the leading contributor
to output, reflecting transitions towards
higher-productivity activities. In contrast,
other states continue to rely more heavily on
low-productivity sectors, with limited shifts
in their economic base. These differences are
not merely incidental, rather, they appear to
be closely linked to varying levels of economic
development. This raises a critical policy
question: Do higher-income states tend to
have larger, more dynamic service sectors?
And if so, what explains this relationship?
India’s experience, in this context, points
directly into the broader discourse on
development models particularly the viability
of a services-led path. Classical models of
structural change, such as those articulated
by Fisher (1939) and Clark (1940), postulate
a sequential movement from agriculture to
industry and eventually to services. However,
India appears to have witnessed a significant
rise in the share and role of services much
earlier in its development process. The Indian
services sector comprises both modern,
tradable segments such as IT, finance, and
professional services and traditional, often
informal, non-tradable segments such as
retail, hospitality, and personal services.
Both components play important roles in the
economy- the former in driving productivity
and exports, and the latter in employment
absorption and domestic demand. Recent
theoretical and empirical work increasingly
highlights that services particularly modern,
tradable ones can contribute significantly to
productivity growth, structural transformation,
and employment diversification, especially in
the contexts where industrialisation is weak or
delayed (Dasgupta & Singh, 2005; Nayyar et
al., 2021; Amirapu & Subramanian, 2015).
This structural reorientation, where services
increasingly substitute for manufacturing in
delivering key growth functions has not played
out evenly across India’s states. Dasgupta
and Singh (2005) emphasise that India’s
services-led transformation is made viable by
its comparative advantage in human capital
and digital capabilities, but they also imply
that the ability to harness this potential is
context-specific. Amirapu and Subramanian
(2015) show that some service sub-sectors
(Finance, Insurance, Professional Services, IT/
ITeS etc.) demonstrate higher productivity
and convergence that is comparable to
manufacturing. But these dynamic service
sectors are highly skill-intensive and require
immense skilling interventions to substantially
upgrade low-skilled labour. This structural
reorientation, where services increasingly
substitute for manufacturing in delivering key
growth functions has not played out evenly
across India’s states. Rodrik (2016) shows
that in many developing economies, including
India, manufacturing has begun to stagnate
at much lower levels of income than in earlier
industrialisers, constraining its potential as an
engine of broad-based growth. In this context,
services have assumed an outsized role,
providing a “second-best” pathway to structural 5
Service Sector Composition and State
Income Patterns
12
12 The section henceforth uses analysis/data based on 22 states including two UT (Delhi & Chandigarh). The sample
selection of these 22 states/UTs is based on methodological alignment with the approach adopted in Dev (2024),
which employs a comparable framework and set of states for regional analysis. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics 34
transformation in the absence of sustained
industrialisation. India exemplifies this pattern
of growth as Nayyar (2012) documents, the
country has experienced an unusually early
and rapid expansion of services, encompassing
both modern tradable segments such as IT
and finance and traditional non-tradables such
as retail and hospitality. This dual expansion
underscores the centrality of services in India’s
growth model, while also highlighting the
unevenness of its developmental outcomes.
Avdiu et al. (2022) provide further empirical
grounding, demonstrating that tradable
services not only contribute to output but
also generate significant spillover effects
into non-tradable segments, particularly
in more urbanised districts. These inter-
sectoral linkages suggest that regions with
better service ecosystems see stronger local
employment and demand multipliers. Taken
together, these insights suggest that the
relationship between service sector dynamism
and economic development is shaped by a
complex interplay of structural conditions
across states. Building on this understanding,
this section classifies the states based on the
average share of services in their GSVA and
examines how this aligns with levels of average
per capita incomes (PCI).
To better understand the heterogeneity in
services-led development across Indian states,
we classify states and UTs into four groups
based on their average share of services in
GSVA:
Group 1: States with a services share above
55%, exceeding the national average
Group 2: States with services share between
50% and 55%
Group 3: States with services share between
40% and 50%
Group 4: States with a services share below
40%
These groupings reflect the complex structural
landscape of India’s subnational economies,
shaped by varying levels of urbanisation,
infrastructure, and institutional capacity.
The scatter plot in Figure 11 illustrates a
positive relationship between states’ PCI and
their services sector share in GSVA. States
with stronger service orientation tend to
exhibit higher income levels, pointing to
the sector’s developmental significance.
When read alongside Table 5.1, which
disaggregates services into constituent
sub-sectors, this typology enables a more
granular understanding of how states’ growth
trajectories are embedded in sectoral structures
and where targeted interventions might yield
the greatest developmental returns.
The first group comprises states and UTs
with a strong services sector orientation,
characterised by an average services share
exceeding 55% of GSVA—above the national
average. This category includes Delhi (84%),
Chandigarh (89%), Karnataka (62%), Kerala
(62%), Telangana (60%), Bihar (58%) and
Maharashtra (56%). These economies are
structurally aligned toward services such as
real estate, finance, professional and technical
services, trade, and other services (likely
education-related), with varying combinations
of formal and informal components.
Delhi and Chandigarh are frontrunners, with
both high services shares and high PCI. In
Chandigarh, the services sector is largely
concentrated in ‘Trade & Repair Services’
(35.4%) (the highest among all Indian states
and UTs) followed by ‘Real Estate, Ownership
of Dwellings & Professional Services’
(25.7%), ‘Financial Services’ (15.9%), ‘Public
Administration’ (7.7%), and ‘Other Services’
(6.8%). The prominence of trade and repair
reflects Chandigarh’s zoning-led urban
planning, which has enabled specialized retail
and service corridors catering to the Tri-City
region of Chandigarh–Mohali– Panchkula. Its India’s Services Sector: Insights from GVA Trends and State-Level Dynamics35
Figure 5.1: Relationship between Average Services Sector Share in GSVA and Average PCI
across States (2011–12 to 2023–24)
Note: This scatter plot illustrates two dimensions for 22 Indian states/UTs (2011–12 to 2023–24): the x-axis shows average
real PCI, while the y-axis represents the average share of services in GSVA.
Source: Author’s own calculation based on GSVA at constant prices (2011-12), MoSPI.
dual-capital role sustains demand for
professional services such as legal,
architectural, and engineering services. High
share of financial services (15.9%) is likely
driven by high banking penetration, formal
workforce participation, and digital adoption,
reinforcing Chandigarh’s position as a service-
oriented economy. Whereas Delhi’s services
sector is highly urbanized and diverse. ‘Real
Estate, Ownership of Dwellings & Professional
Services’ contributes 30.8%, possibly reflecting
robust demand for commercial and consulting
services. ‘Financial Services’ (19.0%) highlights
Delhi’s status as a national financial centre,
while ‘Transport & Storage’ (13.7%) underscores
its logistical importance within the NCR. ‘Trade
& Repair Services’ (15.4%) and ‘Other Services’
(11.1%) support the city’s growing urban
population through health, education, and
community infrastructure.
Karnataka, Kerala, and Telangana, each with
average services shares above 60%, exhibit
distinct yet structurally advanced service
economies. Karnataka’s services sector is
anchored by high-productivity segments. ‘Real
Estate, Ownership of Dwellings & Professional
Services’ contributes 50.8%, followed by ‘Trade
& Repair Services’ (14.5%), ‘Other Services’
(9.4%), ‘Financial Services’ (8.6%), and
‘Transport & Storage’ (8.0%). The dominance
of real estate and professional services reflects
strong urban demand and a thriving property
market. The 8.6% share of Financial Services
continues to benefit from Karnataka’s fintech
ecosystem, supported by digital and banking
penetration and rising corporate activity
(Government of Karnataka, 2024–25).
Kerala’s services sector is led by ‘Real Estate,
Ownership of Dwellings & Professional Services’
(26.1%), ‘Trade & Repair Services’ (25.7%), and India’s Services Sector: Insights from GVA Trends and State-Level Dynamics 36
‘Other Services’ (18.6%). The 26.1% share of real
estate and professional services is likely driven
by remittance-fuelled residential construction,
particularly in peri-urban and rural areas. This
segment also includes professional services
such as architecture, legal advisory, and
consultancy, which have expanded in cities
like Kochi and Thiruvananthapuram with the
growth of IT hubs and return migration after
the pandemic (Government of Kerala, 2024).
The 18.6% share of ‘Other Services’ reflects
long-standing investments in education,
health, and community infrastructure,
generating employment across private
schools, hospitals, NGOs, and community-
based institutions. The 8.3% share of Financial
Services may be attributed to high banking
penetration, cooperative networks, financial
literacy, and sustained remittance inflows
(Govt of Kerala, 2024). Kerala’s services sector
is shaped by diaspora-driven consumption,
high social capital, and diversified urban
services, positioning it as a resilient service-led
economy among Indian states.
Telangana, with an average services share
of 60.3%, represents a digitally oriented
model centred on Hyderabad’s IT and startup
ecosystem. ‘Real Estate, Ownership of Dwellings
& Professional Services’ contributes 34.1%,
reflecting agglomeration around innovation
corridors and sustained urban expansion.
Legal, architectural, and consultancy services
are clustered around Hyderabad’s IT hubs,
supported by initiatives such as T-Hub, TASK,
and T-Works (Government of Telangana, 2024;
Vidya, 2019). Trade & Repair Services at 21.5%,
highlight the strength of retail networks and
rising consumer demand, particularly post-
pandemic. Official data indicate a 20.8% annual
growth in trade and hospitality services in
2023–24, suggesting operational recovery and
market expansion (Government of Telangana,
2024). ‘Other Services’, contributing 12.9%,
include education, healthcare, and personal
and community services. Though modest in
GSVA share, this segment plays an important
role in supporting social infrastructure and
employment. Telangana’s services share in
GSVA increased from 52.8% in 2011–12 to 62.4%
in 2023–24, significantly exceeding the national
average, reflecting growth aligned with digital
infrastructure, IT exports, and professional
services centred around Hyderabad’s Hitech
City.
Maharashtra sits at the threshold of this group,
with an average services share of 56%. The
state’s services growth is anchored by its dual
urban centres Mumbai and Pune, which have
catalysed structural shifts toward finance,
IT, real estate, and media services. Between
2011–12 and 2023–24, the share of services in
GSVA rose from 51.1% to 59.5%, indicating the
transformation of Maharashtra’s economy into
one deeply embedded in high-value, urban-
led services. The composition includes ‘Real
Estate, Ownership of Dwellings & Professional
Services’ (35.6%), ‘Financial Services’ (19.8%),
‘Trade & Repair Services’ (14.2%), ‘Other
Services’ (12.3%), ‘Transport & Storage’ (8.2%),
and ‘Public Administration’ (5.9%). These
patterns suggest a service structure aligned
with financial intermediation, corporate
consultancy, retail sector penetration. As
reported in Figure 10, the state contributes
around one-fourth of India’s total financial
services GVA, reflecting its concentration of
national financial institutions, capital markets,
and insurance hubs. The state’s IT and
knowledge economy is anchored in Pune and
Navi Mumbai. Mumbai and Pune host over 196
and 220 IT parks respectively, generating more
than ₹7.47 lakh crore in software exports and
23.6 lakh direct jobs as of 2023–24 (Government
of Maharashtra, 2024). These figures illustrate
Maharashtra’s integration into global value
chains, supported by the Maharashtra IT/ITeS
Policy 2023 and the State Export Promotion
Policy (Government of Maharashtra, 2024).
Beyond IT and finance, media, logistics, India’s Services Sector: Insights from GVA Trends and State-Level Dynamics37
and entertainment services, particularly in
the Mumbai Metropolitan Region, further
diversify the sector. The state’s dominance
in film production, television broadcasting,
advertising, and warehousing has created
multiplier effects in urban employment and
business services, making Maharashtra a model
for urban agglomeration-led services growth.
Given this, Bihar presents a distinctive case
within this category, recording the lowest PCI
despite maintaining a relatively high average
services share of 58%. This divergence suggests
that the services sector in the state may be
primarily characterised by lower-productivity
and more informal segment. ‘Trade & Repair
Services’ (27.8%) and ‘Other Services’ (20%)
are led by small-scale neighbourhood retail
outlets, self-employment, and other services.
‘Real Estate, Ownership of Dwellings &
Professional Services’ (17.8%) is largely driven
by remittance-funded self-construction (Govt.
of Bihar, 2024-25; ADRI, 2024). The 11.6%
share of ‘Transport & Storage’ reflects growth
enabled by investments in connectivity and
road infrastructure, while ‘Financial Services’
(7.7%) has expanded through financial inclusion
efforts and increased mobile transactions.
‘Public Administration’ (8.7%) continues to
play a central role in employment and public
expenditure (Government of Bihar, 2024–25).
The second group includes states with an
average services share between 50% and 55%
of GSVA and reflects considerable structural
heterogeneity. Tamil Nadu (52%) and West
Bengal (51%), the two states in this category,
exhibit differentiated patterns of growth. Tamil
Nadu presents a robust, diversified service
economy underpinned by financial services,
real estate, and IT-enabled sectors, supported
by higher urbanization and relatively high
PCI. Its services share has grown from 50.5%
in 2011–12 to 51.7% in 2023–24. This expansion
reflects sectoral integration across cities such
as Coimbatore, Tiruppur, and Madurai, which
serve as hubs for technology, finance, logistics,
healthcare, and education (Government of
Tamil Nadu, 2024). The IT and ITeS sector,
particularly in Chennai, has benefited from a
skilled workforce & sophisticated infrastructure
(Vidya, 2019). The presence of software export
units, back-office operations, and fintech firms
has sustained high-value services growth.
Additionally, Tamil Nadu’s strategic coastal
location has supported logistics development,
with multimodal infrastructure centred around
Chennai and Tuticorin ports.
In contrast, West Bengal, despite a similar
GSVA composition, records a lower per capita
income indicative of a services economy more
concentrated in informal trade, retail, and public
sector activities. The leading contributors
to services GSVA include ‘Trade & Repair
Services’ (26.7%), ‘Real Estate & Professional
Services’ (22.6%), and ‘Other Services’ (15.2%).
The dominance of trade and repair services
likely corresponds with Kolkata’s historical
role as a regional trading centre. Notably,
relatively lower shares in ‘Financial Services’
(11.8%) and ‘Communication & Broadcasting’
(4.1%) suggest limited expansion of high-value,
technology-enabled services.
The third group comprises states with an
average services share between 40% and
50% of GSVA, including Haryana (49%), Punjab
(48%), Uttar Pradesh (48%), Andhra Pradesh
(42%), Rajasthan (42%), Jharkhand (42%), and
Assam (42%). Among these, Haryana and Punjab
benefit from a higher degree of formalization
and proximity to economic corridors. Haryana’s
services sector is composed primarily of ‘Real
Estate, Ownership of Dwellings & Professional
Services’ (35%), ‘Trade & Repair’ (27.2%),
‘Transport & Storage’ (9.9%) and Financial
Services (9.8%). The economic pull of cities like
Gurgaon and Faridabad, integrated into the NCR
ecosystem, supports growth through spillovers
from IT/ITES, residential development, and
commercial activity. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics 38
Table 5.1: State/UT-wise Average Composition of Services GSVA by Sub-Sectors (in %, 2011-12 to 2023-24)
13
States
Trade, repair, hotels and
restaurants
Transport &
storage
Communication &
services related to
broadcasting
Financial
services
Real estate,
ownership of
dwelling &
professional
services
Public
administration
Other
services
Trade & repair
services
Hotels &
restaurants
Chandigarh (88.8)35.43.13.71.815.925.77.76.8
Delhi (84.1)15.41.513.72.419.030.86.211.1
Karnataka (62.3)14.52.48.02.38.650.84.19.4
Kerala (61.5)25.72.49.73.18.326.16.118.6
Telangana (60.3)21.52.310.02.411.134.15.712.9
Bihar (57.9)27.81.611.64.87.717.88.720.0
Maharashtra (55.6)14.21.58.22.619.835.65.912.3
Tamil Nadu (51.7)20.22.69.33.412.031.55.815.2
West Bengal (51.4)26.71.49.24.111.822.69.015.2
Haryana (48.8)27.20.79.92.49.835.05.19.9
Punjab (48.4)21.31.37.54.111.720.211.722.2
Uttar Pradesh (47.8)19.02.312.83.98.428.913.711.0
Jharkhand (42.4)24.61.713.54.27.621.013.414.0
Andhra Pradesh
(42.3)
17.72.717.64.111.019.69.617.8
Rajasthan (42.3)25.31.39.74.19.824.57.617.7
Assam (42.2)27.81.09.84.67.713.914.420.8
Himachal Pradesh
(39.7)
15.12.97.15.19.125.512.722.6
Madhya Pradesh
(38.8)
27.01.511.35.112.413.813.715.3
Uttarakhand (38.7)30.63.65.812.57.614.59.815.7
Odisha (38.2)23.62.112.24.49.518.412.217.7
Gujarat (36.1)34.3-11.83.615.615.98.810.0
Chhattisgarh (33.9)19.2-9.14.310.327.713.216.2
Note: Green indicates the top three sub-sectors based on their share in the overall services sector. Each state’s services sector is composed of various sub-sectors whose
shares collectively sum to 100%. Consequently, the share of each service sub-sector represents its proportional contribution within the state’s entire services sector.
Source: MoSPI GSVA/NSVA at constant prices (2011-2012).
13 Transport, storage, communication & services related to broadcasting’ (MoSPI Classification) has been broken into ‘Transport & storage’ & ‘communication & services
related to broadcasting’. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics39
Punjab, though historically agriculture-based,
exhibits an evolving urban service structure.
‘Other Services’ (22.2%), ‘Trade & Repair’
(21.3%), and ‘Real Estate & Professional
Services’ (20.2%) dominate the services
GSVA, reflecting a consumption-driven urban
economy supported by education, healthcare,
and informal commerce.
In Andhra Pradesh, services are anchored
in ‘Real Estate, Ownership of Dwellings &
Professional Services’ (19.6%), ‘Trade & Repair
Services’ (17.7%), and ‘Other Services’ (17.8%).
This composition suggests a diverse services
sector but weighted towards activities tied to
urban consumption, logistics corridors, local
trade, and public services.
Rajasthan’s service economy remains modest,
shaped by ‘Trade & Repair Services’ (25.3%),
‘Real Estate & Professional Services’ (24.5%),
and ‘Other Services’ (17.7%). These reflect
demand linked to tourism, public employment,
and informal trade activity. Relatively, lower
shares of ‘Financial Services’ (9.8%) and
‘Communication’ (4.1%) highlight the sector’s
limited diversification into high-productivity
areas.
Within the 40–50% services GSVA bracket,
Uttar Pradesh, Jharkhand, and Assam stand
out for their lower per capita incomes vis-
à-vis other states in the same bracket. In
Uttar Pradesh, services contribute 47.8%
(average over 2011-12 to 2023-24) to GSVA,
with leading segments including ‘Real Estate,
Ownership of Dwellings & Professional
Services’ (28.9%), ‘Trade & Repair’ (19%), and
‘Public Administration’ (13.7%). The relatively
lower shares of ‘Financial Services’ (8.4%)
and ‘Communication’ (3.9%) reflect weak
integration into modern service ecosystems,
constrained by under-urbanization and
infrastructure gaps.
Jharkhand, with a 42.4% average services
share, shows similar patterns. Its service sector
is led by ‘Trade & Repair Services’ (24.6%) and
‘Real Estate & Professional Services’ (21%),
underlining a narrow base oriented around
public sector activity and informal markets.
Assam (42.2%) presents a comparable
structure, with Guwahati dominating service
activity (Economic Survey of Assam 2023-24).
‘Trade & Repair’ (27.8%) and ‘Other Services’
(20.8%) lead GSVA contributions, supported
by other services such as education and
health. Across these three states, accelerating
services growth will need strengthening
formal sector capabilities, fostering innovation,
and enhancing skill development. Building
robust infrastructure and technology-enabled
services can create high-value employment
opportunities. Expanding access to quality
education and vocational training will equip
the workforce for emerging sectors.
The final group consists of states where the
services sector contributes less than 40%
to GSVA, including Chhattisgarh (33.9%),
Odisha (38.2%), Madhya Pradesh (38.8%),
Gujarat (36.1%), Uttarakhand (38.7%), and
Himachal Pradesh (39.7%) reflecting a
broader dependence on natural resources or
manufacturing. Within this group, Gujarat,
Uttarakhand, and Himachal Pradesh stand
out as outliers for distinct structural reasons.
Gujarat’s low services share stems from a
policy emphasis on industrial and port-led
growth. Despite this, the absolute size of its
economy means that even a smaller proportion
of services in GSVA corresponds to a large and
growing services sector, especially around
urban hubs like Ahmedabad and GIFT City
(Socio-Economic Review Gujarat, 2024–25).
Uttarakhand and Himachal Pradesh exhibit
relatively less diversified service economies,
shaped by geographic constraints, limited
private sector investment, and a reliance on
public administration and tourism-related trade.
Uttarakhand’s service sector is anchored in ‘Trade
& Repair’ (30.6%), ‘Other services’ (15.7%) and India’s Services Sector: Insights from GVA Trends and State-Level Dynamics 40
‘Real Estate & Professional Services’ (14.5%) while
its ‘Financial services’ (7.6%) registered one of the
lowest contributions when compared with the
other states. Himachal Pradesh’s services sector
is led by ‘Real Estate & Professional Services’
(25.5%), ‘Other services’ (22.6%) and ‘Trade
& Repair’ (15.1%). Both states face significant
outmigration of working-age populations due
to limited local opportunities. In Uttarakhand,
this has led to long-term rural depopulation in
hill regions, while Himachal Pradesh experiences
more seasonal or temporary migration. The
predominance of low-productivity segments
such as real estate (driven by second-home
markets), government employment, and basic
services reflects structural limits to service
sector expansion (Himachal Pradesh Economic
Survey, 2024–25; Uttarakhand Budget Analysis,
2024–25).
Chhattisgarh’s service sector is led by ‘Real
Estate & Professional Services’ (27.7%) and
remains modest due to the dominance of
mining and mineral-based industries. There
is scope for diversification into financial
and modern business services which, when
combined with the state’s strong industrial
base, can support a more balanced and resilient
growth trajectory. Odisha’s services sector is
led by ‘Trade & Repair’ (23.6%) and follows a
similar pattern, with GSVA heavily reliant on
mining and mineral-based industries. The state
can unlock service sector growth by leveraging
its IT/ITeS potential and capitalising on its
diverse tourism opportunities with supportive
infrastructure and workforce development
(Odisha Economic Survey, 2023–24).
Madhya Pradesh, despite its central location
and economic diversity, also reflects lagging
service sector development with services
contributing only 38.8 % of the GSVA. ‘Trade
& Repair’ (27%), ‘Other Services’ (15.3%) and
‘Real Estate & Professional Services’ (13.8%)
dominate the services GSVA. Urban centres
such as Indore and Bhopal are emerging hubs
for IT, education, and real estate, but these
gains remain localized. To achieve inclusive
and sustained economic growth, the services
sector can be expanded by diversifying
into high-value activities such as IT, finance,
education, and healthcare, while effectively
implementing the IT, ITeS & ESDM Investment
Promotion Policy 2023 to harness the state’s
technology potential (CII, 2025).
It may be noted that inferences in this
section are based on available Gross State
Value Added (GVA) data from MoSPI, state-
level macroeconomic surveys and reports,
as well as relevant studies on services sector
performance at the state level. A more detailed
disaggregation of sub-sector performance has
not been feasible due to the limited granularity
of data within composite service sub-sectors
at the state-level. This limitation restricts
the ability to precisely identify the drivers of
services-led growth across states. For instance,
the broad category of ‘Real Estate, Ownership
of Dwellings, and Professional Services’
combines several distinct and heterogeneous
activities, including:
• Real estate services
• Ownership of dwellings
• Information and computer-related services
• Professional, scientific, and technical
services (including R&D and real estate)
• Administrative and support service
activities
Similarly, the category of ‘Other Services
includes several services such as:
• Education
• Health & Social Work
• Services of Membership Organizations
• Arts, Entertainment, and Recreation
• Personal Services Including -Washing, Hair
Dressing, Custom Tailoring and Funeral
Related Services
• Private Household with Employed Person India’s Services Sector: Insights from GVA Trends and State-Level Dynamics41
Such aggregation may mask important
sector-specific insights. For example, states
like Maharashtra, Karnataka, and Telangana
likely benefit significantly from IT services,
corporate consulting, and digital innovation
ecosystems, which are currently grouped
within the broader ‘Real Estate, Ownership of
Dwellings, and Professional Services’ category.
Similarly, in states such as Kerala, growth driven
by socially oriented services like education,
health, and community welfare is also less
clearly distinguished within the ‘Other Services’
category under the current classification. More
refined data would allow clearer differentiation
between tradable, high-growth service sectors
and domestically focused, fiscally driven ones,
which is an essential step toward regional
services transformation.
The analysis in this section reveals that richer
states are not only more service-oriented, but
are also more likely to host dynamic, marketable
services that drive long-term growth.
Meanwhile, lower-income states, unless they
invest in the right enablers, risk being locked
into stagnant or low-return service structures.
Moreover, the link between income growth
and services sector expansion is mutually
reinforcing. Higher incomes support greater
demand for education, healthcare, and financial
services. In turn, these services improve
human capital, productivity, and quality of
life, feeding back into economic growth.
However, this virtuous cycle depends heavily
on having the right enabling environment:
digital infrastructure, urban planning, skilled
workforce, and institutional capacity.
The spatial flexibility of services, especially
digital ones, offers a unique window of
opportunity for lagging states. As Ghani and
Kharas (2012) notes, services are less tied to
location than manufacturing, meaning that
even geographically remote or landlocked
states can benefit from this transformation.
With the right investments in broadband,
e-governance, and skill development, these
states can leapfrog traditional industrial phases
and move directly into modern, tradable,
knowledge-based services. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics 42
The preceding section examined the relationship
between income levels and the size of the
services sector across Indian states, revealing
that structural transformation does not follow a
uniform pattern. Although richer states generally
have a larger services sector, the relationship is
not uniform, with notable variation even among
states at comparable income levels. The present
section adopts a dynamic lens. Rather than
asking how income and services correlate today,
it poses a more forward-looking question: Are
states that started with a lower share of services
in their GVA now catching up? In other words,
beyond differences in income, is there evidence
that structurally lagging states are undergoing
transformation through faster services sector
growth?
Addressing this requires an understanding
of whether Indian states are becoming more
similar in the structure of their economies,
particularly in the weight of the services sector.
This is central to assessing the inclusiveness
and regional balance of India’s broader
economic transformation. A useful starting
point is the concept of sigma convergence,
which evaluates whether the dispersion in
the services sector’s share across states has
declined over time. If sigma convergence is
observed, it would indicate that states are
gradually aligning in terms of their structural
reliance on services. Complementing this, beta
convergence explores whether states with
initially lower services shares have experienced
faster subsequent growth in those shares, a
sign of catch-up dynamics. Together, these
measures offer a more complete picture of
whether India’s services-led growth model is
reinforcing regional divergence or enabling
convergence.
6.1 Trends in Regional Disparities in
Service Sector Growth
As mentioned, sigma convergence refers to
a reduction in the dispersion of a particular
economic indicator, such as the share of services
in GSVA, across regions over time. In the context
of state-level services sector development,
sigma convergence implies that the variation
in services shares among Indian states is
decreasing, indicating a trend toward structural
uniformity. Conversely, a widening dispersion
suggests sigma divergence, where some states
are advancing more rapidly in services-led
growth while others lag, thereby reinforcing
regional disparities. This concept is central to
assessing the inclusiveness of India’s economic
transformation. Figure 6.1 illustrates the trends
of inter-state dispersion in services sector shares
over the period 2011–12 to 2023–24, using two
commonly employed statistical measures: the
standard deviation
14
and the coefficient of
variation
15
.
A particularly notable divergence is observed
during the period 2020–22, coinciding with
the COVID-19 pandemic. The sharp increase in
dispersion during these years reflects structural
asymmetries in digital infrastructure, public
service delivery, and institutional response
capacities across states. These disruptions
disproportionately affected less-prepared
states, amplifying existing gaps in services
sector performance.6
Service Sector Growth in Indian States:
Patterns and Opportunities for Convergence
14 Standard deviation measures the spread or variation of the services sector share across states. A higher standard
deviation means there is a larger gap between the states with the highest and lowest services sector shares. A lower
standard deviation means the gap has narrowed, indicating more uniformity in services sector growth.
15 Coefficient of variation is a relative measure of dispersion, which compares the standard deviation to the average value
(mean) of the services sector share. It’s used to compare variation across groups that might have different scales or
averages. It helps to see how consistent or inconsistent the services sector share is across states, in relation to the
average level of services sector share in the economy. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics43
Figure 6.1: Inter-State Differences in Services Sector Performance over time (2011-12 to 2023-24)
Note: The Standard Deviation & Coefficient of Variation for the state’s service sector share in GSVA are plotted to assess
the sigma convergence/divergence.
Source: Author’s own analysis based on GSVA at constant prices (2011-12), MoSPI
However, the absolute level of inter-state
dispersion remains relatively moderate, which
implies that the observed divergence may not
be deeply entrenched. Instead, it likely reflects
transitional imbalances in structural readiness
rather than long-term structural divergence.
6.2 Catch-up Dynamics in Service
Sector Growth across States
In contrast to sigma convergence, which
captures the evolution of cross-sectional
dispersion over time, beta (β) convergence
focuses on the conditional growth dynamics
of a structural variable. Specifically, it tests
whether units with relatively lower initial
values of a structural variable exhibit faster
subsequent growth. In the present analysis,
the focus is not on income levels as is common
in traditional β-convergence models (Barro &
Sala-i-Martin, 1992; Islam, 1995), but rather on
structural composition, captured by the share
of services in GSVA.
The empirical approach estimates a dynamic
panel regression model, where the change in
the log share of services in GSVA is regressed
on its own lagged value, capturing convergence
in sectoral structure rather than income.
This approach draws on global research on
structural change (e.g., McMillan et al, 2014)
and avoids the shortcomings of income-based
models, which can be affected by temporary
factors like government transfers, informal
income volatility, or earnings from natural
resources. By focusing on changes in the
services sector, it captures how a state’s past
economic structure shapes its future growth.
The analysis uses annual panel data for 22 major
Indian states/UTs spanning 2011–12 to 2023–24
and shows strong evidence of β-convergence
in India’s services sector—states with lower
initial shares of services in GSVA are growing
their services base more rapidly than those
with higher initial shares. This catch-up effect
evidenced by a significant negative coefficient
(β₁ = -0.285, p < 0.01), indicates a trend toward
structural convergence1. This finding suggests
that states with initially lower shares of services
in GSVA have experienced faster growth in those
shares over time.
This structural catch-up pattern is increasingly
visible in parts of India where the services
sector is expanding from a relatively low base.
Regions that have traditionally depended more
on primary or secondary activities are now
gradually shifting toward service-intensive India’s Services Sector: Insights from GVA Trends and State-Level Dynamics 44
sectors such as logistics, health, education, and
administration. This trend reinforces the view
that structural transformation in India may not
follow the classical income-led sequence.
This empirical evidence of β-convergence
supports the view that services-led
transformation is spatially expanding and no
longer concentrated exclusively in advanced
urban-industrial centres. Similar trends have
been identified in other emerging economies,
where sectoral shifts have become decoupled
from conventional income-led sequences (De
Vries et al., 2015; Timmer et al., 2015).
The fact that β-convergence emerges despite
the absence of income convergence implies
that structural change can be catalysed by
factors other than rising per capita income
alone. In particular, this reinforces insights from
Dasgupta and Singh (2005), who argue that
in contexts of weak industrialisation, modern
services can substitute for manufacturing as
the engine of productivity growth. This has
been observed in India, where ICT-enabled
services, finance, logistics, and education have
expanded in several low-income states without
a preceding phase of industrial deepening
(Ghani & O’Connell, 2014; Nayyar & Hallward-
Driemeier (2021).
The convergence process observed in the
aforementioned states reflects a realignment
of economic composition away from primary
activities toward service-intensive sectors such
as retail, public administration, education, health,
and logistics. These shifts align with empirical
findings by McMillan et al (2014), who suggest
that structural transformation is path-dependent
and influenced by institutional, geographic, and
infrastructural constraints. As such, lagging
states are not converging automatically but
are doing so within the limits of their existing
capabilities and factor endowments.
The policy relevance of these findings is
underscored by the fact that β-convergence,
though evident, is not guaranteed. The
pace and sustainability of catch-up are
conditional on enabling factors such as digital
infrastructure, skilled labour supply, urban
readiness, and state capacity. Cherodian and
Thirlwall (2015) provide evidence that Indian
states with stronger institutional quality and
human capital investments are more likely to
experience conditional convergence. Similarly,
Dutta and Barman (2022) find that structural
convergence is achievable when supported by
targeted public investment and governance
reforms. These findings support the case for
state-contingent policy interventions, which
are tailored to the institutional readiness and
sectoral gaps of individual states. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics45
The analysis presented in the report firmly
establishes the importance of the services
sector in India’s ongoing growth story, while
highlighting the need for targeted policy
interventions to address sectoral and regional
disparities. Accounting for more than half of
the country’s Gross Value Added (GVA), the
services sector has emerged as the primary
driver of growth, exports, and employment.
However, its expansion is marked by
considerable heterogeneity which is ranging
from sub-sectoral variations to wide disparities
across states in terms of institutional capacity,
infrastructure, and sectoral composition.
To address these challenges, the report
proposes a comprehensive policy framework
that combines sub-sectoral analysis with
state-specific strategies. Section 7.1 includes
a detailed classification of 15 concorded
services sub-sectors based on their GVA
contribution and growth performance,
alongside their tailored recommendations.
Section 7.2 and State-specific Annexure
discusses policy unlocks for the 22 states
analysed in section 5 & 6.
7.1 Sectoral Prioritisation: Mapping
Services for Policy
An analysis of compound annual growth rates
(CAGR)
16
and average sub-sector GVA shares
in the overall services share in the national
GVA (2011–12 to 2023–24) reveals a clear four-
quadrant classification based on growth and
performance over the years. This analytical
framework enables targeted policy responses
that align with the structural positioning of
each group.
While a comprehensive, sector-specific
deep dive is essential to inform precise
policy interventions and regulatory reforms,
the present analysis offers a way forward
grounded in available data and existing
literature. This preliminary mapping thus
serves as a foundational step, guiding policy
direction while signalling areas that merit
further empirical and institutional inquiry.
Figure 7.1 presents a strategic quadrant chart,
mapping sub-sectors along two axes: the
horizontal axis reflects average GVA share,
while the vertical axis captures CAGR.
Using median thresholds
17
, GVA share at 3.13%
and CAGR at 6.47%, the chart classifies sub-
sectors into four categories:
• High GVA Share, High CAGR – Engines of
Growth: Large, fast-growing sectors with
competitiveness.
• Low GVA Share, High CAGR – Emerging
Stars: Small but rapidly expanding sectors
with future potential.
• High GVA Share, Low CAGR – Mature
Giants: Large, structurally significant
sectors with sluggish growth.
• Low GVA Share, Low CAGR – Struggling
Segments: Small and stagnant sectors
requiring structural reform.
This quadrant-based approach offers a data-
driven lens for policy formulation, helping
identify whether to scale up competitive
sectors, nurture high-growth emerging
domains, or restructure lagging and rigid
segments.7
Strategy and Policy Imperatives for India’s
Services Sector
16 CAGR (Compound Annual Growth Rate) refers to the constant annual growth rate of a variable over a specified period,
assuming year-on-year compounding.
17 The sectors are categorized based on median values of both Avg. GVA Share and CAGR. The rationale for using
medians in quadrant classifications aligns with Tukey’s advocacy for robust, non-parametric methods in exploratory
data analysis where robustness to outliers and balance in group sizing is important (Tukey, 1977). India’s Services Sector: Insights from GVA Trends and State-Level Dynamics 46
A Engines of Growth (High GVA Share –
High Growth Sectors)
These sectors represent the structural
drivers of India’s services economy, which
is characterized by their high output share,
strong compound growth, and alignment
with both domestic and export demand. Their
performance signals competitiveness, digital
readiness, and value-added job creation across
knowledge and consumption-linked services.
• Computer & Information Services: GVA
expanded from ₹2.4 trillion to ₹10.8 trillion,
with its share rising from 6% to 12.2%. This
sub-sector includes software publishing,
IT outsourcing, cloud computing, and
platform services anchored by high-value
digital exports and the rapid scaling of
Global Capability Centres (GCCs). It has
become India’s flagship services export
engine.
• Professional, Scientific & Other Business
Services: GVA grew from ₹8.1 trillion to
₹17.7 trillion, maintaining a 20% share of
the services sector. It includes consulting,
R&D, legal, engineering, and design
services. As a globally tradable and
knowledge-intensive domain, this sub-
sector signals India’s transition toward
higher-end service value chains and
professional exports.
• Trade & Repair Services: This high-
employment, consumption-driven sector
saw GVA rise from ₹7.9 trillion to ₹18
trillion. It comprises wholesale and retail
trade, informal retail, and repair services.
Despite its scale, it remains vulnerable
Figure 7.1: Policy-Relevant Mapping of Services Sub-Sectors by Average GVA Share and
Compound Annual Growth Rate (2011–12 to 2023–24)
Note: The figure categorises service sub-sectors into four quadrants based on their average GVA share and CAGR (2011–12
to 2023–24), using median thresholds. Quadrants represent: (a) high GVA & high growth, (b) low GVA & high growth, (c)
high GVA & low growth, and (d) low GVA & low growth. The median separates higher and lower values in the dataset.
Source: Author’s own analysis based on GVA at constant prices (2011-12), MoSPI India’s Services Sector: Insights from GVA Trends and State-Level Dynamics47
to informal economy volatility and
consumption shocks, as seen during the
2020–21 contraction.
• Education Services: With GVA increasing
from ₹2.7 trillion to ₹ 6.5 trillion, this sector
has grown through digital and blended
delivery models. Ed-tech platforms,
teacher skilling, and public-private hybrid
institutions have enabled inclusive access
and regional outreach making it a key lever
for long-term service-sector employment
and productivity.
Way Forward: To fully harness the growth
potential of India’s high-performing service
sectors, policy efforts must focus on enabling
infrastructure, regulatory reform, and
institutional innovation. Policy priorities may
include boosting digital infrastructure (5G,
cloud, data centres) to support IT & ed-tech
platforms, incentivising frontier technologies
(e.g., artificial intelligence, cybersecurity),
enhancing export competitiveness through
integrated logistics and digital trade facilitation,
modernising retail trade by encouraging SME
digitisation, digital payments adoption, and
the integration of e-commerce with traditional
retail networks. Furthermore, the growth of
computer and information services should be
supported by developing Tier-2 digital service
hubs and anchoring GCC growth via university-
linked innovation zones and integrated tech-
town planning.
B Mature Giants (High GVA Share – Low
Growth Sectors)
This segment consists of large-scale, structurally
significant service sub-sectors that have
contributed consistently to overall GVA but
exhibit moderate or slowing growth. Their
trajectory reflects cyclical sensitivities, legacy
constraints, and the need for systemic upgrades.
Unlocking productivity in these sectors will
require regulatory simplification, digital
enablement, and infrastructure modernization.
• Transport Services: GVA rose from ₹4
trillion to ₹7.1 trillion, but the sector’s
share declined from 10.2% to 8.1% during
the reference period. Comprising road,
rail, air, and pipeline services, it remains
core to trade and mobility but is sensitive
to fuel volatility, infrastructure gaps, and
seasonal demand shocks.
• Financial Services: With GVA increasing
from ₹ 4.1 trillion to ₹8.8 trillion, the sector
has maintained a stable ~10% share in
the services economy. The sub-sector
includes banking, NBFCs, and financial
intermediation, and showed counter-
cyclical resilience during the pandemic
due to rising digital financial adoption and
credit flow digitization.
• Personal, Cultural & Recreational
Services: This consumption-driven
sector reflects discretionary spending
in urban India, including personal care,
entertainment, and event services. Despite
its potential, its GVA share declined from
3.6% to 2.6%, highlighting sensitivity to
lifestyle shifts and under-investment in
formalization and content clustering.
• Government Services (n.i.e.): A
foundational component of the services
economy, the sector’s share dropped
from 12.4% to 9.6%. It includes public
administration, and social services not
elsewhere classified.
Way Forward: Revitalizing mature service
sectors requires targeted innovation, digital
integration, and regulatory streamlining. In
transport, modernize infrastructure through
multimodal logistics platforms like ULIP and
invest in EV-ready, climate-resilient public
transit. For financial services, expand last-mile
delivery via Jan Dhan, BharatNet, and India Post
networks, while enhancing interoperability
and digital access. Government services could
focus on digitization, process automation, and India’s Services Sector: Insights from GVA Trends and State-Level Dynamics 48
service delivery reforms to improve efficiency
and citizen reach. In personal and recreational
services, digital content clustering, and skill-
based training to unlock urban employment
potential can be the focus. Across these
sectors, productivity gains depend on
infrastructure upgrades, integrated digital
platforms, and adaptive skilling aligned with
service transformation.
C Emerging Stars (Low GVA Share – High
Growth Sectors)
This segment comprises sunrise service sub-
sectors that, while currently contributing
modestly to overall GVA, exhibit rapid and
sustained growth. They reflect structural
transformation, rising consumer demand,
digital penetration, and new employment
potential. With targeted policy support, these
sectors are poised to become future growth
engines of India’s services economy.
• Health Services: GVA doubled over the
reference period to ₹2.5 trillion, with a post-
pandemic growth rate of 11.7% in 2023–24.
This sector includes hospitals, diagnostics,
pharmaceuticals support, and wellness
services. Public health investments under
schemes like Ayushman Bharat and digital
initiatives under ABDM have expanded
the footprint of care delivery. However,
challenges remain in health workforce
availability, primary care infrastructure,
and regional disparities.
• Telecommunications: After witnessing a
mid-decade decline in its share of services
GVA, the sector rebounded post-2019–20,
maintaining positive growth even during
the pandemic. It now plays a pivotal role
in digital infrastructure, data services,
and rural inclusion. Investments in 4G/5G
rollout, BharatNet Phase II, and telecom
reforms have strengthened the ecosystem,
but spectrum pricing, infrastructure sharing,
and rural reach remain key policy frontiers.
• Travel: Severely affected by the pandemic,
the sector posted a contraction of –53.8%
in 2020–21 but has since recovered to
near pre-pandemic levels. With a current
GVA share of ~2.3%, the sector includes
domestic tourism, air travel, rail-based
circuits, and hospitality services. Revivals
in domestic mobility, tourism-linked
MSMEs, and cultural tourism hubs have
driven recent growth. However, it remains
vulnerable to external shocks and suffers
from seasonality and regional disparity.
• Audio-Visual & Related Services: With a
small but growing GVA share of ~0.7%, this
sub-sector includes OTT platforms, digital
media, gaming, and content creation. It has
seen exponential consumer engagement
due to affordable mobile data, youth
demographics, and vernacular content
demand. While the sector holds creative and
export potential, monetisation challenges,
IP enforcement, and fragmented regulatory
frameworks limit its scaling.
Way Forward: Emerging service sectors such
as healthcare, telecommunications, tourism,
and audio-visual industries offer strong growth
potential and require targeted policy support.
In healthcare, strengthen district-level digital
systems, enhance mobile diagnostics, and invest
in skilling frontline workers. Telecommunications
should focus on expanding last-mile connectivity
and enabling efficient infrastructure sharing.
Travel can be scaled by developing integrated
regional hubs that link transport and local
circuits. The audio-visual sector would benefit
from dedicated city-level clusters, simplified
content development processes, and export-
enabling policies. Together, these actions can
foster inclusive growth, improve service delivery,
and unlock new employment and innovation
opportunities across rising service domains.
D Struggling Segments (Low GVA Share –
Low Growth Sectors) India’s Services Sector: Insights from GVA Trends and State-Level Dynamics49
This group comprises service sub-sectors
with limited contribution to overall GVA and
muted growth performance over the reference
period. Their underperformance is often
linked to legacy delivery models, structural
inefficiencies, and inadequate investment or
policy attention. While some sub-sectors show
pockets of promise (e.g., e-commerce-driven
logistics), most require modernisation, digital
reform, and viability-oriented restructuring to
regain relevance and productivity.
• Postal & Courier Services: Though
this sub-sector’s share in services GVA
remains marginal at ~0.4%, its GVA has
doubled from ₹0.17 trillion to ₹0.34 trillion.
Growth has largely been driven by the
expansion of e-commerce, particularly in
rural India, and the evolving demand for
last-mile delivery. However, the sector still
operates on traditional logistics models
and faces challenges in infrastructure
efficiency, financial sustainability, and
digital integration.
• Insurance & Pension Services: This sub-
sector has consistently maintained a small
and declining share in overall services
GVA. It also recorded negative growth
during several years of the reference
period, reflecting subdued penetration,
fragmented product outreach, and limited
trust in institutional channels. Despite the
potential for social security expansion, the
sector remains underleveraged in both
formal employment and rural coverage.
• Others: This is a residual sub-sector
comprising niche and fragmented services
not classified elsewhere. Its GVA has
remained stagnant in both absolute and
relative terms during the reference period,
with little contribution to job creation or
innovation. These services often lack scale,
standardisation, and formal financing.
Way Forward: Low-performing service sectors
such as postal and courier services, insurance and
pensions, and other fragmented services require
structural reform and modernization to enhance
relevance and efficiency. For postal services,
upgrading last-mile logistics infrastructure and
integrating digital tracking systems can improve
service quality and reach. Insurance and pension
coverage can be expanded through simplified
digital platforms and targeted outreach
in underserved areas. Other niche service
segments would benefit from credit accessibility
and local ecosystem development. Revitalizing
these sectors will require coordinated efforts in
digital enablement, delivery model innovation,
and viability-oriented investment to build long-
term sustainability. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics 50
7.2 State Specific Recommendation
This section outlines broad policy
recommendations for states, grouped by their
average services sector share in GSVA from
2011–12 to 2023–24 (as presented in section
5). The approach is structured around three
“policy unlocks” that aim to remove structural
constraints and stimulate services-led growth.
Unlock 1 facilitates core infrastructure (digital,
spatial, and institutional) to enable services
expansion.
Unlock 2 embeds services within industrial
ecosystems and strengthens workforce
capabilities through targeted skilling.
Unlock 3 scales decentralized service delivery
and fosters inclusive innovation.
These unlocks follow a phased “build-embed-
scale” logic and are proposed to be supported
by enablers such as Digital Public Infrastructure
(DPI), regionally aligned skilling systems, and
local service platforms. The recommendations
proposed are tailored to the economic context
of each state group to ensure broad-based
and sustainable growth. For state-specific
recommendations, refer to Annexure.
A States with Average Services’ Share
Above 55%
18
This group, comprising Chandigarh, Delhi,
Karnataka, Kerala, Telangana, Bihar, and
Maharashtra, reflects high service sector
intensity higher than the national average,
with significant contributions from real estate,
finance, professional services, and trade. The
Table 7.1: Services Sub-Sectors’ Policy Unlocks
Strategic
Group
Characteristics Sector ExamplesWay Forward
Engines of
Growth
• High GVA share
and high growth
• Computer & Information
Services,
• Trade & Repair,
• Professional, Scientific,
Other Business
• Education
• Incentivize frontier
technologies (AI, fintech,
R&D),
• Expand global market access,
Boost digital exports
Mature Giants
• High GVA share
but slow growth
• Transport,
• Financial Services,
• Government Services (n.i.e.)
• Personal cultural &
Recreational Services
• Encourage innovation,
• Digitisation,
• Regulatory simplification, and
• Sustainable urban integration
Emerging
Stars
• Low GVA share
but high growth
• Audio-Visual & Related
Services,
• Health,
• Telecommunications,
• Travel
• Invest in skilling,
• launch sector-specific
missions,
• Expand PPP-led service
infrastructure,
• Enable clusters
Struggling
Segments
• Low GVA share
and low growth
• Insurance & Pension
Services,
• Postal & Courier,
• Others
• Enhance productivity via tech
infusion,
• Support entrepreneurship
18 While Bihar falls under this high-service-share group, its services composition and growth pattern diverge from
the others. Trade & repair, logistics, and other services like education-not globally tradable sectors-dominate its
GSVA. Policy focus: a) Promote decentralized, digitally-enabled service delivery models, focused on public services,
education-tech, logistics, and governance consulting, supported by digital infrastructure and local skilling ecosystems;
b) Prioritize foundational service infrastructure e-governance, DBT systems, and connectivity to build a base for more
advanced digital services and employment generation. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics51
sectoral mix varies in terms of formalisation
and tradability.
Unlock 1: Scaling Global Service Exports
• Strengthen Digital Export Infrastructure:
Expand high-speed digital infrastructure
(5G, cloud computing, edge data centers)
to enable scalable, export-oriented
services such as fintech, cybersecurity,
EdTech, and legal-tech.
• Foster Innovation-Driven Export
Clusters: Develop globally competitive
clusters in health-tech, climate services,
and design through dedicated R&D zones,
academia-industry partnerships, and
cross-border collaborations.
• Enhance Global Credibility and Branding:
Build trust infrastructure through robust
IP protection, certification systems, and
branding initiatives to position India as a
global services hub.
Unlock 2: Decentralise Services to Tier-2 and
Tier-3 Cities
• Target High-Potential Urban Centers:
Invest in digital infrastructure, logistics,
and skilling ecosystems in select Tier-
2/3 cities to extend the services sector
beyond metropolitan regions.
• Leverage Regional Strengths: Develop
service clusters rooted in local comparative
advantages and supported by academic
and industry linkages.
• Future-Ready Skilling: Align skilling
initiatives with emerging demand in
sectors such as governance consulting,
clean-tech, and digital service delivery.
Unlock 3: Promote Inclusive Innovation
• Establish Urban Innovation Zones: Create
flexible, regulation-light zones for sectors
like telemedicine, digital learning, and
MSME advisory services.
• Incubate Service-Sector R&D: Support
innovation hubs focused on AI, clean-tech,
digital platforms, and climate services
with future employment potential.
• Enable Platform-Based Work Models:
Utilise Digital Public Infrastructure
(DPI) to connect local talent to market
opportunities in decentralised services.
B States with Average Services’ Share
Between 55–50%
This group includes Tamil Nadu and West Bengal,
where services are moderately integrated with
industrial ecosystems. Strategic interventions
should strengthen this convergence to raise
value-added contributions.
Unlock 1: Advance Services–Industry
Convergence
• Tamil Nadu – Embedded Services in
Industrial Clusters: Deepen integration
of IT-enabled services in manufacturing
clusters such as Coimbatore, Hosur, and
Tiruppur to enhance service intensity and
productivity.
• MSME-Corridor Integration: Enable co-
location of specialized service MSMEs
(e.g., design, compliance, warehousing)
within industrial parks and along freight
corridors, supported by plug-and-play
infrastructure.
• West Bengal - Regional Logistics
Cluster: Develop the Kolkata-Durgapur-
Siliguri corridor as a logistics and supply
chain services hub, leveraging regional
connectivity and industrial demand.
Unlock 2: Embedding Services in Industrial
Ecosystems
• Applied Tech Skilling Hubs: Establish
training centres in AI, cloud computing,
and data science in locations such as
Coimbatore and Durgapur, anchored in
academia–industry partnerships. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics 52
• Vocational Trainings: Link skilling
pathways to service-intensive industries
such as logistics, and agri-analytics.
• Future-Oriented Skilling: Support
transition into emerging service
niches such as climate services, digital
governance, and MSME advisory.
Unlock 3: Scale Decentralised Inclusive
Innovation
• Urban Innovation Zones: Pilot service-
focused innovation hubs in Tier-2 cities
encouraging startups in health-tech, ed-
tech, and logistics.
• Inclusive Platforms: Use digital public
infrastructure to connect rural and semi-
urban workers to new service opportunities.
C States with Average Services’ Share
Between 50–40%
This group, comprising Haryana, Punjab,
Uttar Pradesh, Jharkhand, Andhra Pradesh,
Rajasthan, and Assam show moderate services
sector integration, with scope for regionally
anchored growth.
Unlock 1: Corridor-Linked Regional Service
Hubs
• Integrate Digital and Physical
Infrastructure: Create multi-service parks
along key industrial and logistics corridors
to co-locate digital platforms and physical
services.
• Strengthen Institutional Linkages: Engage
local academic and training institutions
to build skilled talent pools and incubate
region-specific service enterprises.
Unlock 2: Develop Region-Specific Service
Clusters
• Develop Tier-2/3 Service Hubs: States
could leverage regional strengths to build
specialised service clusters. Assam could
focus on logistics and energy-linked
services; Uttar Pradesh on digital religious
tourism; Punjab, Haryana, and UP on Agri-
logistics; Andhra Pradesh on port-based
services. Rajasthan and Jharkhand can
promote creative MSME services, including
craft design, heritage content, and
traditional goods e-commerce. Aligning
these with industrial corridors and skilling
initiatives will create a mutually reinforcing
cycle of services and industry interlinkages.
Unlock 3: Decentralised Service Delivery and
Inclusive Innovation
• Inclusive Platforms: Use digital public
infrastructure to extend access to e-health,
digital education, and MSME advisory
services in semi-urban and rural areas.
• Local Innovation Ecosystems: Create
small-scale innovation hubs in Tier-2
towns to support startups in agri-tech,
climate services, and rural logistics.
D States with Average Services’ Share
Below 40%
This group comprising Himachal Pradesh,
Madhya Pradesh, Uttarakhand, Odisha, Gujarat,
and Chhattisgarh, has average services sector
contribution ranging between 30-40%,
with economies more dependent on natural
resources or industry or agriculture.
Unlock 1: Establish Core Infrastructure for
Rural and Resource-Linked Services
• State Specific Service Expansion: Promote
sectors such as tourism, wellness (Ayush),
logistics, climate/energy services, and
MSME-related services in resource-rich
regions like Madhya Pradesh, Chhattisgarh,
and Odisha. Gujarat could scale exports
in financial, professional, and energy
services, leveraging GIFT city’s regulatory
infrastructure and the state’s prowess in
manufacturing and renewable energy.
• Public Service Infrastructure: Strengthen
service delivery systems in hilly remote
regions, particularly in Himachal Pradesh
and Uttarakhand, focusing on creating
certified eco-tourism/wellness hubs. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics53
• Digital Connectivity: Expand broadband
and mobile penetration to enable service
markets in underserved districts.
Unlock 2: Embed Services in Industrial
Ecosystems and Workforce Skilling
• Context-Specific Skilling Pipelines: Tailor
skilling to regional and local strengths in
the specific states.
• Community-Based Platforms: Integrate
skilling with SHG networks, Livelihood
Missions, and rural incubators to promote
micro-entrepreneurship in states. Expand
platform-based work and cooperative
models to extend service opportunities to
tribal and remote communities.
• Industrial Integration: Link services to
resource-based industries (mining, agro-
processing) and manufacturing to create
value-added service chains.
Unlock 3: Decentralised Service Delivery and
Inclusive Innovation
• Digital Public Platforms: introduction of
telemedicine, e-governance, agri-fintech,
and climate/energy services across
underserved regions.
• Local Innovation Ecosystems: Establish
rural innovation hubs to incubate service
startups in climate adaptation, agri-tech,
and eco-tourism.
Table 7.2: Summary: State Group-wise Policy Unlocks
Strategic
Group
States Covered Policy Unlocks
Average
Services’
Share - More
than 55%
Chandigarh
Delhi
Karnataka
Kerala
Telangana
Maharashtra
• Scale global service export through export-ready digital
infrastructure, innovation-led clusters, and global branding and
trust systems.
• Decentralise services by developing Tier-2/3 cities, innovation
zones, and regionally anchored clusters.
• Promote inclusive innovation via innovation zones, service-linked
R&D and digital platforms.
Bihar
• Promote decentralised digital service models in public services,
EdTech, logistics, and governance, supported by local skilling and
infrastructure.
• Prioritise foundational infrastructure-e-governance, DBT systems,
and connectivity to enable advanced digital services.
Average
Services’
Share -
Between
55–50%
Tamil Nadu
West Bengal
• Promote services–industry convergence by embedding IT-
enabled services in industrial clusters and developing logistics
hubs (e.g., Kolkata–Durgapur–Siliguri).
• Embed services in industrial ecosystems through tech-skilling
hubs, vocational training, and digitised public service delivery.
• Scale decentralised, innovation-led employment through
innovation zones, digital platforms, and future-ready skilling.
Average
Services’
Share -
Between
50–40%
Haryana
Punjab
Uttar Pradesh
Jharkhand
Andhra Pradesh
Rajasthan
Assam
• Develop corridor-linked service hubs in Tier-2/3 cities by
integrating infrastructure and institutional talent networks.
• Leverage regional strength to build specialised service clusters
in logistics, tourism, agri-logistics, ports, and creative MSMEs.
• Scale decentralised service delivery and innovation-led
employment via digital platforms (health, education, MSMEs) and
local innovation hubs in Tier-2 towns.
Average
Services’
Share - Less
than 40%
Himachal Pradesh
Madhya Pradesh
Uttarakhand
Odisha
Gujarat and
Chhattisgarh
• Establish core infrastructure for rural and resource-linked
services through targeted expansions, service delivery upgrades,
and digital connectivity.
• Embed services in industrial ecosystems and workforce skilling
in community-based platforms, leveraging regional strengths and
industrial integration.
• Decentralised service delivery and innovation through digital
public platforms and local innovation ecosystems. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics 54
This report highlights India’s distinct and
early shift toward services as the principal
engine of economic growth in its structural
transformation journey. As of 2023–24, the
services sector accounted for 54.5% of India’s
GVA, surpassing both primary (16.7%) and
secondary (28.8%) sectors. It has been the
most consistent and dynamic component
of India’s economy, growing at a CAGR of
around 7% between 2011–12 and 2023–24.
This performance is not only reflected in
output, but also in the sector’s expanding
role in employment generation, investment
inflows, and exports. A key contribution of
this report is its disaggregated analysis using
a concordance-based classification of 15 sub-
sectors, providing a clearer picture of growth
patterns and priority areas for policy. India’s
services offering has increasingly shifted
towards high-value, tradable, and productivity-
enhancing domains such as information
technology (IT) and IT-enabled services (ITeS),
financial services, professional and business
services, trade and repair, and transport—
sectors that are central to enhancing India’s
global competitiveness.
At the sub-national level, the report offers a
detailed perspective on services-led growth
while also identifying a critical limitation: the
absence of granular, disaggregated data.
Current reporting structures especially at the
state level, aggregate structurally distinct
activities under broad categories like Real
Estate, Ownership of Dwellings & Professional
Services or Other Services. This broad
aggregation often dilutes the visibility of high-
growth segments such as IT and legal services,
limiting the ability to design finely targeted,
evidence-based policies at the state level.
India’s structural transformation increasingly
deviates from the classical sequential model,
agriculture to industry to services, and instead
reflects a leapfrogging pattern where services
emerge as the dominant growth driver, even
in the absence of widespread industrialisation.
This shift is empirically validated by a
strong positive correlation between the
average services share in GSVA and average
per capita income. States such as Delhi,
Chandigarh, Karnataka, Kerala, Telangana,
and Maharashtra exemplify this trajectory.
Their service economies are underpinned by
high-productivity, urban-centric sectors like
IT, financial and professional services, and real
estate. Bengaluru and Hyderabad’s emergence
as global tech hubs, Mumbai’s dominance
in financial services, and Chandigarh’s
specialization in trade and legal consulting
have resulted in dynamic, formal sector-led
growth.
However, this pattern is not uniform across
states. Some states, like Bihar, present a
distinctive case where a relatively high average
services share of around 58% coexists with
modest levels of per capita income, suggesting
a predominance of low-productivity or informal
service activities. West Bengal, with a moderate
services share, also records slower income
growth, possibly reflecting limited penetration
of high-value service segments and weaker
financial linkages. Among middle-tier states
such as Tamil Nadu, Haryana, Punjab, and
Uttar Pradesh, outcomes vary considerably.
States with a higher degree of formal sector
integration, like Tamil Nadu and Haryana, have
seen services contribute positively to income
growth and upward mobility.
At the other end of the spectrum, a group of
states, including Gujarat, Himachal Pradesh,
Uttarakhand, Madhya Pradesh, Odisha, and
Chhattisgarh exhibit comparatively lower
shares of services in their GSVA. This is often 8
Conclusion India’s Services Sector: Insights from GVA Trends and State-Level Dynamics55
shaped by a mix of factors such as a strong
manufacturing or resource-based growth
orientation (as in Gujarat and Odisha),
geographical and structural characteristics
that influence economic diversification (as
in the hill states of Himachal Pradesh and
Uttarakhand). Despite lower proportional
contributions, several of these states maintain
robust absolute levels of services output,
particularly where the overall economy is
large and diverse as is the case with Gujarat.
These patterns reaffirm a central insight that
it is not solely the share of services in the
economy that determines developmental
outcomes, but rather the composition and
quality of those services, defined by attributes
such as tradability, productivity, and level of
formalisation. Recognising these qualitative
dimensions is essential for tailoring growth
strategies to the unique strengths and
opportunities present within each state.
However, the report also finds promising signs
of convergence. Although inter-state disparities
in services sector shares have modestly
increased, especially during the pandemic
due to differences in digital infrastructure and
institutional readiness, there is strong evidence
that structurally lagging states are beginning
to catch up. This pattern of catch-up suggests
that India’s services-led transformation is
becoming more spatially inclusive. With the
right investments in digital infrastructure,
skilling, urban readiness, and governance
capacity, lagging states can transition into
more dynamic service economies. To ensure
that this transformation is equitable and
sustainable, future policy must be tailored to
state-specific contexts, recognising both the
potential and constraints of each region. Equally
important is recognising that services cannot
grow in isolation. Their long-term dynamism
is deeply interdependent with manufacturing,
agriculture, and other productive sectors of the
economy. Stronger linkages between services
and manufacturing—such as IT-enabled
logistics, design and R&D services for industrial
clusters, or financial intermediation supporting
MSMEs can increase the developmental impact
of services, generating multiplier effects across
the economy. As India moves towards its Viksit
Bharat @2047 vision, ensuring that the services
sector becomes a shared engine of growth
across all states will be central to achieving a
future that is not only economically robust, but
also inclusive, balanced, and resilient.
*** India’s Services Sector: Insights from GVA Trends and State-Level Dynamics 56
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APPENDIX India’s Services Sector: Insights from GVA Trends and State-Level Dynamics 62
GVA share
Category2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-192019-20 2020-21
2021-22
2022-232023-24
Computer &
Information services
5.99 6.26 6.84 7.30 8.519.168.88 9.26 9.66 11.63 11.39 11.88 12.23
Professional,
scientific & other
business services
(including R&D, &
real estate)
20.47 20.48 21.10 21.15 20.64 20.62 19.30 19.18 19.21 20.11 19.8919.7520.03
Transport10.17 10.179.979.759.539.179.38 9.21 8.777.378.57 8.36 8.06
Travel2.26 2.16 2.00 1.93 2.002.012.06 2.10 2.09 1.06 1.32 2.11 2.30
Trade & Repair 19.99 20.66 20.3420.4120.67 21.01 22.3722.7322.89 20.3820.72 20.7620.40
Others0.420.390.370.34 0.31 0.280.270.250.24 0.24 0.240.22 0.20
Financial Services 10.43 10.50 10.82 10.55 10.30 10.169.95 9.78 9.4910.7910.249.899.96
Telecommunications 2.24 2.20 2.31 2.38 2.48 2.171.711.561.752.13 2.10 2.11 2.14
Insurance & Pension
Services
1.67 1.81 1.661.79 1.791.37 1.40 1.24 1.23 1.49 1.11 1.29 1.09
AV & related services0.510.520.670.70 0.760.80 0.96 0.90 0.840.75 0.75 0.73 0.71
Education6.756.57 6.47 6.31 6.26 6.35 6.66 6.88 6.94 7.20 7.30 7.29 7.38
Government n.i.e. 12.37 11.66 11.0210.7010.16 10.18 10.54 10.51 10.42 11.30 10.66 9.94 9.64
Personal, cultural &
Recreational services
3.55 3.50 3.47 3.56 3.49 3.57 3.35 3.23 3.29 2.21 2.38 2.45 2.58
Health2.762.752.662.76 2.732.75 2.752.762.77 2.92 2.92 2.81 2.88
Postal & Courier 0.42 0.40 0.38 0.380.370.410.420.410.400.410.40 0.400.39
Total 100
.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0100.0100.0 100.
0
Source: Authors concordance mapping, based on MoSPI’s classification of GVA at constant 2011-12 prices.APPENDIX -A1
Table 1: Services’ sub-sector GVA Share (in %) India’s Services Sector: Insights from GVA Trends and State-Level Dynamics63
Growth rate of subsectors (Y-o-Y)
Category2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-222022-23
2023-24
Computer &
Information services
13.22 17.62 17.13 27.56 16.79 3.14 11.68 11.07 10.37 6.91 15.02 12.23
Professional,
scientific & other
business services
(including R&D, & real
estate)
8.38 10.42 10.56 6.81 8.31 -0.47 6.53 6.61 -4.07 7.99 9.54 10.55
Transport7.786.09 7.43 6.93 4.34 8.81 5.29 1.30 -22.99 26.95 7.58 5.09
Travel3.40 -0.42 6.09 13.348.799.179.346.03-53.75 36.8175.7818.73
Trade & Repair 11.97 6.00 10.16 10.84 10.27 13.23 8.867.19-18.38 10.98 10.547.11
Others1.45 0.860.79-0.17 0.33 0.91 0.62 0.96 -6.84 7.800.92 0.70
Financial Services9.1610.927.056.867.004.09 5.41 3.24 4.21 3.61 6.559.73
Telecommunications6.29 13.31 13.03 14.04 -5.25 -16.13 -2.33 19.33 11.91 7.60 10.81 10.66
Insurance & Pension
Services
17.55 -1.54 18.23 9.60-17.039.21 -5.57 5.36 11.71 -19.10 28.26-7.92
AV & related services 10.32 38.74 14.71 18.29 13.78 28.04 0.48 -0.39 -19.04 9.207.576.29
Education5.496.077.098.4610.0111.64 10.62 7.48 -5.04 10.82 10.16 10.22
Government n.i.e. 2.081.736.63 3.91 8.69 10.14 6.84 5.50 -0.613.032.885.73
Personal, cultural &
Recreational services
6.86 6.83 12.47 7.43 10.93 -0.32 3.44 8.53 -38.56 17.6513.7614.72
Health8.06 4.13 13.86 8.449.156.16 7.81 6.66 -3.289.066.3711.70
Postal & Courier 5.28 1.25 8.30 8.56 19.59 8.18 4.23 5.31 -5.68 5.24 11.92 3.83
Total8
.33 7.66 9.81 9.44 8.46 6.34 7.17 6.43 -8.35 9.18 10.33 8.
99
Source: Authors concordance mapping, based on MoSPI’s classification of GVA at constant 2011-12 prices.APPENDIX -A2
Table 2: Services’ sub-sector GVA Growth (in %) India’s Services Sector: Insights from GVA Trends and State-Level Dynamics 64
APPENDIX -A3
Table 3: State wise code list
State/UTsCode
Andaman And Nicobar IslandsAN
Andhra PradeshAP
Arunachal PradeshAR
AssamAS
BiharBR
ChandigarhCH
ChhattisgarhCG
DelhiDL
GoaGA
GujaratGJ
HaryanaHR
Himachal PradeshHP
Jammu And KashmirJK
JharkhandJH
KarnatakaKA
KeralaKL
LadakhLA
LakshadweepLD
Madhya PradeshMP
MaharashtraMH
ManipurMN
MeghalayaML
MizoramMZ
NagalandNL
OdishaOD
PuducherryPY
PunjabPB
RajasthanRJ
SikkimSK
Tamil NaduTN
TelanganaTS
TripuraTR
Uttar PradeshUP
UttarakhandUK
West Bengal.WB
Source: Regional Transport Office codes of respective states. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics65
Endnotes
1
The following equation is used to test for Beta Convergence/Divergence:
∆ln(ServicesShare
it
) = β₀+ β₁ ln(ServicesShare
i, t-1
) + μ
i
+ ε
it
(1)
In equation (1), ∆ServicesShare
it
denotes the first difference of the service sector share in GSVA;
ln(ServicesShare
i, t-1
) refers to the lagged value of the service sector share; β₀ is the intercept term;
β₁ is the slope coefficient; μ
i

represents the time-invariant state-specific fixed effect; ε
it
denotes the
idiosyncratic error term, i indexes the states, and t indexes the years.
The results for the panel regression for equation (1) are given below:
VariableFE Estimates
ln(ServicesShare
i, t-1
)-0.285 (0.045) ***
Constant-0.200 (0.032) ***
R² (Overall)0.0003
Notes: Standard errors in parentheses. *** indicates the statistical significance at 1% level.
Model: Panel - Fixed Effects Estimations | No. of observations: 286
Hausman Test: χ ² = 35.76 (p = 0.000), rejecting the null - individual effects are correlated with regressors
implying FE preferred.
F-statistic = 40.73, [p (=0.000) < 0.001]
The fixed effects (FE) estimation results indicate that the lagged share of the service sector
ln(ServicesShare
i, t-1
) has a negative and statistically significant coefficient of –0.285, significant at the
1% level (as indicated by *). The constant term is -0.200, also significant at the 1% level. Despite the very
low overall R² of 0.0003, the model’s joint explanatory power is supported by a strong F-statistic of
40.73 with a p-value below 0.001, indicating the variables are jointly significant. The Hausman test yields
a χ² value of 35.76 with a p-value of 0.000, leading to rejection of the null hypothesis and confirming
that the individual effects are correlated with the regressors, thus justifying the use of the fixed effects
model over the random effects alternative. Similarly, Breusch–Pagan LM test also justifies the use of the
fixed effects model. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics 66
ANNEXURE
(State Specific Recommendations are documented)
Note: The services sub-sectors shown in the following figures are arranged according to their ranking at the national level,
based on their share in total services Gross Value Added (GVA) in 2023–24. This same order has been followed for all states
to make comparison easier and more consistent. Presenting the data this way helps to understand how important each sub-
sector is in a state compared to its role at the national level, allowing for clearer cross-state analysis. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics67
Key Suggestions:
■ Develop frontier service clusters (AI, health-tech, logistics, creative industries) in Tier-2/3 cities
through innovation parks, startup zones, and digital infrastructure aligned with Swarna Andhra
2047.
■ Establish integrated Agri-service and supply chain ecosystems via Agri-Logistics and Tech
Parks in key Agri belts, MSME design/testing clusters, and port &/or industrial corridor linked
mobility and logistics services.
■ Promote high-value industrial services by building engineering design, quality testing, and
repair-maintenance hubs co-located with industrial corridors and MSME parks.
Key Suggestions:
■ Develop rural Agri-service hubs to integrate cold chains, packaging, advisory, and digital
logistics in tea, sericulture, and food clusters to boost rural service employment.
■ Scale circuit-based eco & cultural tourism to promote hospitality, digital interpretation, and
vernacular experience services across riverine, forest, and heritage zones.
■ Enable decentralized local service platforms to support SHG/co-op-led service delivery in
crafts, wellness, and local enterprises via digital onboarding and market access tools. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics 68
Key Suggestions:
■ Empower local service workers by linking informal enterprises and youth/artisan-led clusters to
e-commerce, digital skilling, and market platforms, especially in high-migration districts.
■ Strengthen last-mile delivery through expanded digital service centres at block and panchayat
levels for e-governance, ed-tech, telemedicine, and financial services.
■ Build Agri-service ecosystems by integrating cold chains, logistics, and advisory platforms for
value-added crops like banana, litchi, and seed potato.
Key Suggestions:
■ Position Chandigarh as a regional hub for medical education and health-tech services by
expanding telemedicine, promoting AYUSH and integrated medicine, and fostering research-
based institutional partnerships.
■ Boost innovation in legal-tech, consulting, and professional services through targeted incubation,
academic collaboration, and shared service labs leveraging the city’s robust knowledge infrastructure.
■ Strengthen digital workforce capabilities by establishing a job-linked skilling pipeline in AI,
GCC, IT, content creation, and business analytics, tailored to urban youth and integrated with
Chandigarh’s strengths. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics69
Key Suggestions:
■ Boost energy and MSME services by leveraging the state’s mineral-power base for smart grids,
solar logistics, and by supporting industrial MSMEs through skilling and digital B2B platforms.
■ Develop rural and tribal service hubs by linking artisan collectives, tribal medicine, and eco-
tourism to e-marketplaces, mobile services, and cultural branding.
■ Improve last-mile service delivery by digitizing education, Agri-advisory, and finance through
tribal-led centres and local infrastructure.
Key Suggestions:
■ Establish service export facilitation centres to anchor cross-border offerings in legal-tech,
fintech, governance platforms, and other GCC based services.
■ Develop Professional Services Clusters integrating AI-enabled legal analytics, regulatory-tech,
and innovation sandboxes for digital entrepreneurs
■ Position Delhi as a Global Education Hub by attracting foreign universities, scaling dual-degree
programs, and expanding EdTech-driven service exports. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics 70
Key Suggestions:
■ Leverage GIFT City’s regulatory and infrastructure advantages to scale exports in FinTech,
RegTech, green finance, and digital compliance.
■ Anchor professional services-digital diagnostics, IoT maintenance, quality assurance, and
logistics support-around MSME and pharma clusters near GIDC estates.
■ Promote clean energy service clusters for Renewable Energy (RE) O&M, Electric Vehicle (EV)
servicing, energy audits, and battery analytics.
Key Suggestions:
■ Leverage corridor connectivity (DMIC, AKIC, KMP) to develop smart logistics–agri-tech zones
offering warehousing intelligence, customs automation, and value-added agri export services
■ Position Haryana as a global backend and capability services hub by expanding GCCs, frontier-
tech verticals (AI/ML-enabled legal-tech, reg-tech, fintech), and compliance analytics linked to
Gurugram’s startup and FDI ecosystem.
■ Build MSME e-service clusters in Tier-2 zones integrating skilling, credit, and digital platforms
with dairy and food processing belts to boost rural service productivity and market access. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics71
Key Suggestions:
■ Strengthen eco-wellness tourism hubs by bundling health retreats, AYUSH, and adventure
services, supported by climate-resilient infrastructure, homestay-linked skilling, and digital
marketing.
■ Develop care economy and health services clusters by expanding nursing, geriatric, and
telehealth training centres in hill districts, aligned with state’s education ranking and diaspora-
driven demand.
■ Scale region-specific service entrepreneurship through digital facilitation centres for horticulture
logistics, e-governance, and tourism content services in towns like Shimla, Dharamshala, and
Solan.
Key Suggestions:
■ Develop industrial service corridors with maintenance, certification, and logistics support for mining–
steel–power hubs (Ranchi, Jamshedpur, Bokaro), boosting MSME integration in value chains.
■ Develop tribal–eco tourism clusters combining artisan retail, forest-based wellness, and guided
nature circuits enabled through local enterprise facilitations.
■ Strengthen rural service delivery ecosystems by establishing agri-linked service clusters and
expanding mobile e-health, education, and banking platforms in underserved tribal districts. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics 72
Key Suggestions:
■ Expand globally competitive service sectors by anchoring GCCs and innovation in AI, AV-tech,
med-tech, and ed-tech, supported by inclusive skilling and digital public infrastructure across
Tier-2/3 cities.
■ Integrate advanced services with core sectors by embedding fintech, design, and platform-based
solutions into manufacturing, logistics, and agri-value chains to drive productivity and formalization.
■ Position Karnataka as a global services export hub by establishing frontier-tech accelerators
focused on AI, robotics, and biotech - integrated with university-led R&D, venture capital
ecosystems, and export facilitation platforms.
Key Suggestions:
■ Scale digital public services by leveraging state-wide fibre connectivity and high digital literacy
to expand e-health, ed-tech, and AI-enabled services through local governments.
■ Strengthen care and wellness economies by expanding health, elder care, early childhood,
Ayurveda, and cultural services through PPPs, skilling, and global branding linked to medical
and wellness tourism.
■ Build future-ready human capital by advancing vocational and digital training in healthcare,
hospitality, maritime, and AI-linked services under state missions like ASAP. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics73
Key Suggestions:
■ Establish Agri-service clusters offering digital traceability-tech, post-harvest testing, and
logistics support in soybean, pulses, and horticulture zones to strengthen export readiness and
value-addition
■ Develop tier-2 digital service zones in emerging urban centres with embedded skilling for rural
BPOs, vernacular IT/ITES, and women-led fintech and e-governance services
■ Scale mobile-enabled education and health services through Panchayat-linked platforms and
youth-led micro-franchises to improve last-mile service access in remote districts.
Key Suggestions:
■ Incentivize the expansion of GCCs through streamlined regulatory processes and targeted
skilling initiatives.
■ Promote clusters in FinTech, RegTech, digital insurance, and ESG compliance-as-a-service in
the Mumbai Metropolitan Region, building on its financial ecosystem and startup depth.
■ Establish hubs in Tier-2 cities (e.g., for e-vehicle diagnostics, battery analytics, and digital
mobility services) by integrating the state’s strong auto-manufacturing base with opportunities
in electric and clean mobility. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics 74
Key Suggestions:
■ Develop mineral-based service corridors by establishing logistics, maintenance, and compliance
hubs around key metal clusters (Angul, Jharsuguda, Kalinganagar) to integrate MSMEs into
mining and metal value chains.
■ Promote marine and coastal services by enhancing fisheries, seafood processing, and maritime
logistics through cold chains, traceability tech, and export support in coastal districts like
Ganjam and Kendrapara.
■ Boost cultural and eco-tourism through integrated digital circuits (e.g., Bhubaneswar–Puri–Konark)
combining heritage, homestays, local guides, and wellness, backed by targeted skilling initiatives.
Key Suggestions:
■ Build rural service hubs near FPOs by integrating cold chains, logistics, retail, and agri-advisory platforms
to boost service jobs and support value-added rural diversification.
■ Expand wellness and care services by leveraging Punjab’s medical ecosystem to promote telemedicine,
eldercare, and AYUSH-based tourism, especially in peri-urban and NRI-focused regions.
■ Enable outbound service employment through ed-tech-enabled certification centres offering globally
recognized credentials in digital, hospitality, and health-tech to enhance placement readiness. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics75
Key Suggestions:
■ Promote integrated healthcare, AYUSH, and wellness tourism services in Rajasthan’s heritage
zones, combining affordable care with cultural tourism.
■ Expand digital access in villages by enabling panchayats to function as “service centres”
offering e-governance, telehealth, ed-tech, and fintech solutions through shared infrastructure
and trained local youth.
■ Align with the Energy Transition Roadmap 2030 by establishing training and service hubs for
RE operations (smart grids, battery storage analytics) in solar park districts such as Bikaner
and Jaisalmer.
Key Suggestions:
■ Develop IT, fintech, and analytics hubs in cities beyond Chennai by establishing modular
infrastructure, service-specific skilling centres, and targeted incubation support for tradable
digital services.
■ Embed advanced services (e.g., design, IoT, data analytics) within industrial corridors to drive Industry
4.0 adoption and bundled service-product offerings in automotive, electronics, and textile sectors.
■ Create dedicated zones for telemedicine, diagnostics, and med-tech R&D. Strengthen health IT
skilling to meet rising domestic and international demand for digital health services. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics 76
Key Suggestions:
■ Build innovation hubs beyond Hyderabad by developing digital zones and shared infrastructure
in Tier-2/3 cities with pharma and IT anchors to support fintech, health-tech, and SaaS startups.
■ Boost tech-enabled services through AI, robotics, and cybersecurity skilling via TASK and
RGUKT, aligned with digital delivery in health, governance, and education.
■ Expand rural service and tourism circuits by integrating telemedicine, Agri-wellness, and craft-
based offerings with PHC-linked infrastructure, digital booking, and homestay platforms
Key Suggestions:
■ Bundle eco-tourism and homestay services through cooperative-led platforms that integrate
lodging, guiding, and booking, supported by skill certification and targeted market access
initiatives.
■ Promote wellness service exports by clustering yoga, AYUSH, and spiritual tourism offerings in
certified centres with standard protocols and international-facing digital platforms.
■ Expand IT-enabled service access in remote districts through rural BPOs and digital skilling in
domains such as governance tech, geospatial tools, and health analytics. India’s Services Sector: Insights from GVA Trends and State-Level Dynamics77
Key Suggestions:
■ Establish logistics, warehousing, repair, and processing service centres near high-output
agricultural belts to link primary production with non-farm growth.
■ Upgrade digital connectivity in PHCs, schools, and gram panchayats to scale telemedicine,
diagnostics, and blended learning through public service institutions.
■ Promote fintech hubs through regulatory sandboxes and integrate them with rural credit,
insurance, and DBT networks to expand access to secure, efficient digital financial services
across urban and rural areas.
Key Suggestions:
■ Modernize warehousing, freight tracking, and cold chain logistics to boost exports of key
goods, while enabling integrated SME platforms for real-time market access and inventory
management.
■ Position Kolkata as an eastern services hub by clustering legal, consulting, publishing, and design
services, leveraging its academic and cultural strengths to scale creative and AV-tech exports.
■ Set up service skilling hubs in northern and Sundarbans districts focused on tourism, digital
finance, and ITES, using apprenticeship and blended learning linked to MSMEs and startups. NOTES NOTES India’s Services Sector: Insights from GVA Trends and State-Level Dynamics79

India’s Services Sector: Insights from GVA Trends and State-Level Dynamics (2025)