India's Services Boom is Spreading: NITI Aayog Report Shows Poorer States are Catching Up
SDG 8: Decent Work & Economic Growth | SDG 9: Industry, Innovation & Infrastructure
Institutions: NITI Aayog | Ministry of Statistics and Programme Implementation
NITI Aayog has released a new analytical report, “India’s Services Sector: Insights from GVA Trends and State-Level Dynamics” (October 2025), showing that the services sector now contributes nearly 55 % of India’s Gross Value Added (GVA). Between 2011-12 and 2023-24, the sector’s employment share rose from 26.9 % to 29.7 %, creating around 40 million new jobs.
The report highlights a tentative convergence across states: lagging regions are beginning to close the gap with service-driven economies such as Maharashtra, Karnataka and Tamil Nadu. However, this progress is structurally uneven: states like Bihar, despite having a high average services share (around 58%), record lower Per Capita Income (PCI) due to a concentration in low-productivity, informal service activities like trade and repair, demonstrating that it is the quality and composition of services, not just scale, that determines developmental outcomes.
The sector is highly diverse: “Engines of Growth” include Computer & Information Services, which has grown nearly fourfold and is India’s flaghsip digital export, and Professional, Scientific & Other Business Services (including R&D and real estate), which accounts for 20% of the services GVA.
The manufacturing share of GVA has remained stagnant at 28-29 %, indicating that India’s structural transformation is being led primarily by services rather than industry.
The report also maps the performance of 15 sub-sectors into four policy-relevant quadrants (Engines of Growth, Emerging Stars, Mature Giants, and Struggling Segments) to guide targeted action. NITI Aayog recommends state-specific service-sector strategies—leveraging local comparative advantages in logistics, finance, healthcare, tourism and digital services—over uniform industrial policy templates. The report also calls for better infrastructure and skills ecosystems to expand employment intensity and productivity.
The findings reaffirm India’s shift toward a services-led growth model, reinforcing policy linkages with Digital India, Atmanirbhar Bharat, and Skill India. Strengthening both digital and physical infrastructure will be critical for inclusive job creation and balanced regional growth.
What is the Services Sector? → The services sector includes activities that do not produce tangible goods but provide support, utility or expertise—for example, trade, transport, finance, IT, education, health, tourism and public administration. It is India’s largest contributor to GDP and employment growth, driving exports, innovation, and urbanisation, and increasingly shaping state-level development strategies.
What is GVA? → Gross Value Added (GVA) measures the value of goods and services produced in an economy minus the cost of inputs and raw materials used. It reflects the real contribution of each sector—agriculture, industry, or services—to overall output. GVA is a core indicator used by MoSPI and NITI Aayog to track growth, productivity and structural shifts within the economy.
Follow the full report here: India’s Services Sector: Insights from GVA Trends and State-Level Dynamics – NITI Aayog (Oct 2025)