The Service Sector in India

29 Pages Posted: 21 Jun 2013

See all articles by Arpita Mukherjee

Arpita Mukherjee

India Habitat Centre - Indian Council for Research on International Economic Relations (ICRIER)

Date Written: June 2013


The service sector is the largest and fastest growing sector in India and has the highest labor productivity, but employment has not kept pace with the share of the sector in gross domestic product and has not produced the number or quality of jobs needed. There is no policy leading to inclusive growth, and multiple, uncoordinated governing bodies adversely affect the growth of the sector. Many regulations are outdated, and there are restrictions and barriers on foreign direct investment. While India is among the top 10 World Trade Organization members in service exports and imports, the growth and export of services is less than that of the People’s Republic of China, and exports are competitive in only a few services and are concentrated in a few markets. Most of the poor in India do not have access to basic services such as healthcare and education, and infrastructure is weak so the cost of service delivery is high. Although India wants to be a knowledge hub, there is no uniformity in the quality and standards of education, and formal education does not guarantee employability. Policy measures are suggested for inclusive growth that will also enhance India’s global competitiveness in services.

Keywords: services, growth, employment, productivity, India

JEL Classification: O14, O40, O47, L80, L88

Suggested Citation

Mukherjee, Arpita, The Service Sector in India (June 2013). Asian Development Bank Economics Working Paper Series No. 352, Available at SSRN: or

Arpita Mukherjee (Contact Author)

India Habitat Centre - Indian Council for Research on International Economic Relations (ICRIER) ( email )

Core 6A, Fourth Floor Lodhi Road
New Delhi, 110003

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