NITI Aayog Report: India’s Services Sector Drives 55% of GVA, Sets Path to Viksit Bharat 2047

India’s Services Sector now drives 55% of GVA. NITI Aayog’s report reveals how digital reforms, state growth, and innovation shape India’s path to 2047.

How India’s Services Sector Became the Engine of Growth

TheInterviewTimes.com | New Delhi | October 29, 2025 — In 2025, India’s Services Sector stands as the dominant force shaping the country’s economic future. According to the latest NITI Aayog report, “India’s Services Sector: Insights from GVA Trends and State-Level Dynamics,” this sector now contributes nearly 55% of India’s Gross Value Added (GVA) — the single largest share of national output.

Unlike most countries that move sequentially from agriculture to manufacturing and then to services, India’s Services Sector has led an unconventional “leapfrog” development model. This shift marks a new global narrative — one where services, not factories, drive national transformation.

The Big Picture: From Fields to Firewalls

Over the past decade, India’s Services Sector has undergone a structural shift that few developing economies have achieved. Between FY2011-12 and FY2023-24, the primary sector’s share in GVA dropped from 21.8% to 16.7%, while the industrial sector stayed steady near 29%. The services sector, however, surged from 49% to 54.5%.

This transformation shows that India’s Services Sector has become both the engine of GDP growth and the shock absorber of the national economy — weathering global disruptions like the pandemic, inflation, and trade slowdowns through digital adaptability and innovation.

Must Read: India’s Services Sector Employs 188 Million: NITI Aayog Flags Urban Bias, Gender Gaps and Job Informality

Global Context: India Joins the World’s Top Service Economies

Globally, services now account for nearly two-thirds of total GDP, and India’s Services Sector is at the forefront of this shift. The NITI Aayog report places India among the top seven service economies worldwide, climbing from 17th position in 2000.

Between 2000 and 2023, India’s services value-added rose from USD 330 billion to over USD 1.6 trillion, supported by IT, finance, and professional services. By 2025, services exports reached USD 387.5 billion, exceeding merchandise exports and contributing 4.3% to global trade.

This leap has established India’s Services Sector as a key global supplier of digital and knowledge-based services, a trend likely to expand further with AI, fintech, and remote education.

Decoding the Data: GVA Trends Reveal the Transformation

NITI Aayog’s analysis shows that India’s Services Sector not only grew faster than agriculture and manufacturing but also diversified into high-value industries.
From FY2011-12 to FY2023-24:

• Primary sector GVA share: declined from 21.1% → 16.7%
• Industry share: steady around 28–29%
• Services share: rose from 50.1% → 54.5%

Within India’s Services Sector, professional, scientific, and business services expanded by 35%, while trade, hotels, and transport recovered strongly post-pandemic. This structural deepening indicates a long-term transition toward digitally intensive and globally tradable services.

Resilience in Crisis: Why India’s Services Sector Is the Stabilizer

During the COVID-19 pandemic, India’s Services Sector acted as the resilience backbone of the economy. Even as global trade faltered, digital exports, fintech transactions, and online education surged.

The sector contracted briefly in FY2020-21 but bounced back with over 9% growth in FY2021-22 and sustained an 8.9% rise in FY2023-24. This rebound shows how technology, data connectivity, and human capital allowed India’s Services Sector to maintain continuity even when physical industries paused.

In essence, it has become India’s most shock-resistant economic pillar.

Fifteen Engines Powering India’s Services Sector

The NITI Aayog report divides India’s Services Sector into 15 sub-sectors. The top performers demonstrate both export competitiveness and domestic demand strength:

Together, these sectors account for the majority of India’s Services Sector GVA, confirming that digital transformation and domestic consumption are driving the next phase of growth.

State-Level Dynamics: Uneven but Expanding Growth

The report provides rich insights into how India’s Services Sector varies across states:

• Southern Leaders: Karnataka, Telangana, Tamil Nadu, and Kerala derive 50–60% of their GSVA from services, driven by IT, education, and healthcare.
• Western Powerhouses: Maharashtra and Gujarat dominate finance, trade, and logistics.
• Union Territories: Delhi and Chandigarh have the highest service dependence — over 85% — due to governance, professional, and real estate activities.
• Northeast Rising: Meghalaya, Nagaland, and Manipur are witnessing new growth through tourism, hospitality, and education.

These patterns show that India’s Services Sector is no longer confined to metro economies. However, regional inequalities remain, with eastern and northern states like Bihar and Uttar Pradesh lagging in high-value service output.

The Income Link: Services and Prosperity Go Hand-in-Hand

NITI Aayog’s findings draw a strong link between the share of India’s Services Sector in a state’s GSVA and its per-capita income. High-service states such as Karnataka, Maharashtra, and Delhi record far higher income levels, illustrating how modern service economies generate faster wealth accumulation.

Yet, the report warns that not all services contribute equally — traditional retail and public administration provide stability but limited productivity. States must therefore pivot toward knowledge-intensive and export-oriented services to unlock higher income growth.

Are States Catching Up? Convergence in India’s Services Sector

The NITI Aayog report uses σ- and β-convergence models to measure how India’s Services Sector evolves across states. Results show slightly rising inequality in service shares but positive catch-up momentum — poorer states are growing faster than rich ones.

This trend signals a slow but steady service-sector democratization. Digital connectivity, e-governance, and skill development are enabling new regional players to join the services economy, though challenges remain in infrastructure and institutional capacity.

Policy Framework: Guiding the Future of India’s Services Sector

To strengthen India’s Services Sector, NITI Aayog outlines a four-pillar strategic framework:

1. Engines of Growth – High-performing global services like IT, finance, consulting.
   Goal: Promote export competitiveness and R&D.
2. Emerging Stars – Health, education, creative media, logistics.
   Goal: Encourage start-ups and skill alignment.
3. Mature Giants – Real estate and trade.
   Goal: Modernize regulation and productivity.
4. Struggling Segments – Transport, postal, and traditional tourism.
   Goal: Boost digital adoption and infrastructure investment.

This matrix helps states design targeted policies suited to their comparative advantage, making India’s Services Sector more regionally balanced and innovation driven.

Must Read: Google AI Hub Visakhapatnam: Google’s $15 Billion Investment to Transform India’s AI Future

Building the Foundation: Infrastructure, Skills, and Innovation

The report highlights four enablers critical to the long-term success of India’s Services Sector:

• Digital Infrastructure: Universal broadband and secure data frameworks to support digital trade.
• Human Capital: Vocational and higher education reforms aligned with future services jobs.
• Institutional Simplification: Streamlined regulations and single-window clearances.
• Spatial Clustering: Development of service corridors and tech hubs to integrate Tier-2 cities.

Such reforms ensure that India’s Services Sector remains globally competitive while sustaining inclusive domestic growth.

Global Implications: The World Looks to India’s Service Model

Internationally, economists view India’s Services Sector as a developmental innovation — proving that a country can leapfrog industrialization and still achieve large-scale growth.

With one of the world’s largest pools of skilled professionals and an expanding digital infrastructure, India’s Services Sector could contribute USD 15–16 trillion to national output by 2047. This trajectory positions India not just as a participant but a leader in the global services economy.

Conclusion: A Services-Led Path to Viksit Bharat @2047

As India envisions Viksit Bharat @2047, India’s Services Sector will remain the cornerstone of that vision. It has already proven its ability to create jobs, attract investment, and build global credibility.

The challenge ahead is to make this growth inclusive, technology-driven, and regionally balanced. Every state — from Karnataka’s innovation corridors to Bihar’s emerging service hubs — must become part of this transformation.

If nurtured through smart policy and digital infrastructure, India’s Services Sector could define the next great chapter of global economic history — one where knowledge, technology, and people together drive prosperity.