Services sector in India: trends,issues, and the way forward

This paper provides an overview of the Indian services sector. It shows that services is the fastest growing sector in India, contributing significantly to gross domestic product (GDP), GDP growth, employment, trade, and investment. India is a major proponent of liberalizing services both in the World Trade Organization and in its bilateral trade agreements. However, there are some concerns. In the recent past, economic growth and growth of the services sector has slowed down. Growth in employment in services has not been commensurate with the share of the sector in GDP. Although India is a major exporter of services, its export competitiveness concentrates in few sectors and a few markets. The paper identifies a number of barriers faced by the services sectors and suggests policy measures which, if implemented, will lead to inclusive growth, increased productivity, generate quality employment, increase trade and investment, and enhance India’s global competitiveness in services.