Skilled labour, simplification of regulations to propel services: Survey

India’s services sector has been the most consistent driver of gross value added (GVA) in the economy.

 

According to the Economic Survey 2024-25, its share in total GVA at current prices has risen from 50.6 per cent in FY14 to around 55 per cent in FY25.

 

Beyond its direct contribution to economic output, the sector employs nearly 30 per cent of the workforce.

 

It plays a crucial role in the broader economy through the “servicification” of manufacturing — where services are increasingly integrated into production and post-production processes.

 

Globally, shifting economic trends are reshaping the demand and growth trajectory of services, making it imperative for India to stay competitive.

 

 

Notably, services are expanding in regions where manufacturing is slowing, and new risks are emerging in IT and professional services due to geopolitical shifts, highlighted the Survey.

 

“Geo-economic fragmentation is reshaping supply chains as trade policies evolve in the West. To sustain the momentum, India must enhance global competitiveness through structural reforms and deregulation,” said Rumki Majumdar, economist, Deloitte India.

 

The Survey also referenced a NITI Aayog working paper that explores the transformative potential of the services sector. The paper classifies the sector into four strategic categories — defend, accelerate, transform, and untapped — each requiring a distinct approach.

 

Computer and information services and professional scientific & business services fall under the sectors to defend. The focus should be to sustain global sectoral presence and enhance market growth.

 

Sectors that need acceleration include transport, trade and repair, education and financial services. Sectors under transformation, which need to boost productivity innovation and global reach, include travel, health and personal, cultural and recreational services.

 

Untapped sectors are those where India needs to increase market share, ensure efficiency and sustainability. These include insurance and pension, audio and visual & related services, telecommunications and postal and courier.

 

Skilled manpower for AI needed

 

The Survey says the emerging services landscape auto-generates two conclusions. First, suitable digital and technical skills stand to benefit from artificial intelligence (AI) penetration.

 

It urges that initiatives taken in the Budget 2024-25 need to be carried forward into action by the synergic efforts of all tiers of the government, private sector and skilling institutions.

 

The Survey also calls for review and amending complicated procedures at the grassroots level, regulations and rules that hinder both manufacturing and services.

 

India’s share in global services exports has been steadily rising for the last two decades. This has helped compensate for the impact of oscillation in the share of merchandise exports in global exports to some extent. India ranks seventh globally, representing a 4.3 per cent share in the global services exports.

 

C-DOT: Reducing dependence on foreign telecom tech

 

  As part of India's move to effectively transition from a technology importer to a technology developer and exporter, the Economic Survey has pointed out a series of innovations made at the Centre for Development of Telematics (C-DoT).

 

India's telecom technology development centre C-DoT has been instrumental in developing indigenous 4G and 5G technologies necessary for the state-run telco to roll out both.

 

The government is eyeing export of indigenously designed 4G and 5G stack of technologies in 2024 as part of bilateral arrangements.

 

Recognising the rising importance of cybersecurity, C-DoT has developed quantum encryption solutions, ensuring secure communication for government and strategic sectors.

 

The centre has also created geo-targeted and automated multihazard, multi-media early warning alerts to citizens, against natural disasters.

 

Through its collaborative research programme, C-DoT fosters indigenous telecom innovation by partnering industry players.

 

This initiative strengthens India's telecom research ecosystem, with C-DoT offering funding and expertise to help companies develop advanced technologies.

 

C-DoT also supports startups. The national initiative for developing and harnessing innovations (Nidhi) and Avishkar programmes have been launched by the government to nurture innovations and ideas into startups.