Service industry redefining economic growth trends in India

The service industry is an eminent contributor to our country’s GDP with a share of 66.1% of the index. The sector is rapidly growing, at approximately 10% per annum in the year 2015-16. Attracting a lot of foreign investments, the sector is opening more employment opportunities each year. The service industry in India includes services like trade and transport, hotels, restaurants, telecommunication, financial services, real estate, business services, social and personal services, services associated with construction and infrastructure development, and newly emerged e-commerce sector.

A budding sector in the service industry, the Ecommerce, is revolutionizing the retail chain functionalities in the country. With big players such as Amazon, Flipkart, and Snapdeal, the industry is sweeping away the traditional trade methods. Although the numbers were not as promising as expected for E-commerce sector in the financial year 2016, forecasts propose that it is going to pick up y-o-y growth rate to become a $120 billion sector by the year 2020. The sector grew just 12% in the year 2016, as compared to 2015, where the growth was 180%. The sales revenue for financial year 2015-16 was $ 30 billion.

Service industry growth patterns

The services sector in India is governed and affected by both domestic and global activities and factors, hence, also the growth of this industry. The service industry in India is expected to achieve a growth rate of 8.8% in the tear 2016-17. After China, which has the services sector growing at 10.9%, India has the second fastest growing services sector. It is also observed that the growth of services sector (6.8%) has been more than the growth of total GDP (4.7%) for the period of the financial years 2001-2014.

India boasts of a leading economy because the growth is driven by services industry. The major factors that help the service industry in India grow are:

Opportunities in Indian Service Industry

With the commendable growth of services industry in India, many opportunities are being created for a various set of individuals and professionals to benefit from.

Opportunities for employment have been coming up in five major sectors of the service industry, i.e., Information Technology, Telecom, Healthcare, Infrastructure, and retail. According to IBEF, the Indian IT industry will touch $225 billion by the year 2020, and as per a study by NASSCOM the size of IT workforce will touch 30 million in the same duration. The rapid penetration of mobile phones in India is fuelling the growth of employment opportunities in Telecom sector. Estimates also say that over 40 million new jobs are expected to be generated by the Indian healthcare sector by the year 2020 in various functions such as sales, marketing, HR etc. within the industry.

Talking about the tourism industry, it has various cashable opportunities for foreign exchange attraction and employment. Considering a rich cultural heritage, varying terrains and ecology, and the natural beauty of the geography of India, the tourism sector attracts a lot of foreign exchange. The tourism industry as a whole is expected to generate 13.45 million jobs. India is the third favorable country for foreign investment and Indian service companies are the major contributor in attracting these opportunities. The IT and ITeS sector of the industry have attracted total FDI inflows of US$ 18 billion between April 2000 and December 2016.

India's service sector has been proved to be the uplifter of its economy contributing to the GDP in major proportions. The government is also taking steps and making policies to liberalize and enhance the industry keeping in place the mandatory and basic regulations intact. As the sector is governed by both domestic and global factors, it is going to be an interesting journey of Indian services sector to reach its forecasted numbers. Till now, the whole picture looks favorable for this booming sector.