India’s services sector has emerged as one of the strongest pillars of the country’s economy, driving growth, job creation, and global economic integration. With exports of services now accounting for around 10% of India’s GDP, the sector has become a crucial contributor to the nation’s external trade performance and long-term development strategy.
According to the World Bank, the services sector accounted for 49.9% of India’s GDP in 2024, exceeding the pre-pandemic average and outperforming many developed economies. The expansion has been fueled by rapid adoption of digital technologies, rising productivity, and deeper integration of Indian companies into global value chains.
Rising Momentum in Services Exports
India’s services exports have continued to grow steadily in the current financial year. Between April and January of FY2025–26, the country’s services exports were estimated at USD 348.4 billion, reflecting strong global demand for India’s digital, professional, and knowledge-based services.
This steady growth has increased the sector’s importance in the broader economy. During FY23 to FY25, services exports accounted for an average of 9.7% of GDP, a significant rise from 7.4% in the pre-pandemic period. In the first half of FY26, the share rose further to 10%, underscoring the sector’s resilience even amid global economic uncertainties.
Beyond trade performance, the services sector has also played a vital role in supporting employment. Today, it accounts for nearly 30% of India’s total workforce, and over the past six years it has generated close to 40 million jobs, helping absorb labour market shocks during the post-pandemic recovery period.
Key Sectors Driving Export Growth
India’s services export strength is largely built on high-value, knowledge-intensive industries. Software services remain the backbone of this expansion, supported by a strong global demand for digital transformation solutions.
Data from the Reserve Bank of India shows that software services exports grew by 7.3% year-on-year in FY25. Within this segment, computer services accounted for more than two-thirds of total software exports, while business process outsourcing (BPO) services continued to dominate IT-enabled service exports.
Overall, software services contribute more than 40% of India’s total services exports. The segment has expanded rapidly, recording an average growth rate of 13.5% between FY23 and FY25, far higher than earlier periods.
At the same time, professional and management consulting services have become another major export engine. Their share of services exports has increased significantly in recent years, rising from 10.5% in FY16–FY20 to 18.3% during FY23–FY25, reflecting India’s growing expertise in advisory, technology, and management services.
Together, digital services, consulting, and business process management now account for more than 65% of India’s services exports, highlighting the country’s growing specialization in cross-border knowledge services.
Budget 2026–27: Strengthening the Services Economy
The Union Budget 2026–27 has introduced several measures aimed at strengthening the services ecosystem and enhancing India’s global competitiveness.
A major focus of the budget is on supporting IT and digital services, which form the backbone of India’s export-oriented service economy. The government has proposed tax incentives and regulatory reforms to attract global cloud service providers to establish infrastructure in India.
Foreign companies offering cloud services through India-based data centres may receive tax holidays until 2047, encouraging investment in digital infrastructure and positioning India as a major hub for global cloud services.
In addition, the budget proposes simplifying compliance rules for IT service companies by consolidating different technology services under a single category. A common safe harbour margin will reduce tax uncertainty, while the threshold for eligibility has been raised substantially to support large IT exporters.
Policy Reforms to Ease Global Business
The government has also proposed faster processing for Advance Pricing Agreements (APAs), which help companies determine fair pricing for cross-border transactions. Streamlining these agreements is expected to improve regulatory certainty and attract more global service providers to operate from India.
At the same time, the budget has emphasized skill development to ensure India’s workforce remains globally competitive. Programmes are being introduced to train multiskilled caregivers, promote medical tourism, and expand opportunities in traditional medicine systems such as AYUSH.
These initiatives could open new avenues for service exports, especially in sectors such as healthcare, wellness, and education.
Tourism and Healthcare as New Export Engines
The government also plans to strengthen India’s position in medical value tourism, a fast-growing global industry. Five regional medical tourism hubs will be developed in partnership with the private sector to attract international patients seeking affordable and high-quality treatment in India.
Tourism infrastructure is also receiving renewed focus. Measures include training 10,000 tourist guides, upgrading heritage sites, and developing cultural tourism circuits to increase international visitor inflows.
Improved connectivity through proposed high-speed rail corridors linking major economic and cultural centres is expected to further support tourism-related services.
Global Capability Centres Driving Export Growth
Another major driver of India’s services exports is the rapid expansion of Global Capability Centres (GCCs). These centres, established by multinational corporations to manage global operations from India, have grown rapidly in recent years.
India currently hosts over 1,700 GCCs, employing more than 1.9 million professionals. Initially focused on support functions, these centres now perform high-value activities such as product development, artificial intelligence, data analytics, engineering design, and cybersecurity.
Their expansion has helped position India as the world’s largest hub for multinational companies’ offshore operations.
India’s Expanding Digital and AI Ecosystem
India’s strong digital talent base is another key factor supporting services export growth. According to the Stanford AI Index, the country ranks second globally in AI skill penetration, reflecting a large pool of technology professionals capable of delivering advanced digital services worldwide.
International assessments also show steady improvements in India’s technology readiness. The country has climbed significantly in the Frontier Technologies Readiness Index of UNCTAD, reflecting growing capabilities in emerging technologies such as artificial intelligence, cloud computing, and data analytics.
With digital adoption rising rapidly, India’s data centre capacity is expected to expand dramatically over the coming decade, strengthening its role in global digital service delivery.
Trade Agreements Expanding Global Opportunities
India’s expanding network of trade agreements is also creating new opportunities for services exports. Recent agreements with economies such as the United Kingdom, Australia, Oman, New Zealand, and the European Free Trade Association are improving market access for Indian service providers.
These agreements typically include provisions that allow easier mobility for professionals, simplified visa procedures, and expanded access across sectors such as IT services, finance, education, engineering, and consulting.
For Indian professionals—from engineers and architects to chefs and yoga instructors—these agreements are opening doors to global employment opportunities and cross-border collaboration.
Rising Investment in Services
Foreign investment trends also highlight growing confidence in India’s services sector. In recent years, more than 80% of total foreign direct investment has flowed into services-related industries, including information technology, communications, and professional services.
This surge in investment is strengthening India’s digital infrastructure, boosting innovation, and expanding the country’s capacity to deliver high-value services to global markets.
The Road Ahead
India’s services sector is expected to remain a key engine of economic growth in the coming decades. With strong digital capabilities, a large skilled workforce, and growing global demand for knowledge-based services, the country is well positioned to expand its share in global services trade.
Government initiatives aim to further strengthen this trajectory, with the long-term goal of securing 10% of global services trade by 2047 as part of the broader Viksit Bharat vision.
As technology, talent, and global partnerships continue to converge, India’s services sector is not only transforming the country’s economy but also creating new opportunities for businesses, professionals, and entrepreneurs on the global stage.