SERVICE SECTOR
INTRODUCTION
◼ Dominant sector in India’s GDP
◼ Covers a wide variety of activities such as trade, hotel and restaurants, transport,
storage and communication, financing, insurance, real estate, business services,
community, social and personal services, and services associated with construction.
INDIA’S ADVANTAGE
ROLE IN ECONOMIC DEVELOPMENT
◼ Driver of economic growth
◼ Rising contribution to GDP
◼ Employment generation
◼ Contribution to exports
◼ Attracts foreign investment – FDI
◼ Transition to knowledge based economy
◼ Entrepreneurial skills
◼ Support to primary and secondary sector
CONTRIBUTION OF MAJOR SERVICES TO GDP GROWTH IN INDIA
◼ Share of the services sector accounted for 55.39% of the total GVA in FY21.
◼ India’s services sector GVA increased at a CAGR of 11.43% to Rs. 101.47 trillion in FY20, from Rs.
68.81 trillion in FY16
◼ Between FY16 and FY20, financial, real estate and professional services augmented at a CAGR of
11.68% (in Rs. terms), while trade, hotels, transport, communication and services related to
broadcasting rose at a CAGR of 10.98% (in Rs. terms)
IMPACT OF COVID-19
FDI IN INDIA’S SERVICE SECTOR
◼ India improved its position from 12th in 2018 to 9th in 2019 in the list of the world’s largest FDI
recipients according to the latest World Investment Report 2020 by United Nations Conference on
Trade and Development (UNCTAD)
◼ Recorded almost 17 per cent jump during April-September 2020 over the corresponding period last
year, despite the global slowdown, the COVID-19 pandemic, lockdown measures and supply chain
disruptions
◼ The jump in FDI equity inflows was driven by strong inflows into the ‘Computer Software &
Hardware’ sub-sector.
◼ High growth in FDI inflows was also present in subsectors such as ‘Retail Trading’, ‘Agriculture
Services’, and ‘Education’
DATA
TOURISM
◼ Tourism sector is a major engine of economic growth that contributes significantly in terms of GDP,
foreign exchange earnings and employment
◼ COVID-19 pandemic has had a debilitating impact on world travel and tourism
◼ The tourism sector in India had been performing well with Foreign Tourist Arrivals (FTAs) growing at
14 per cent to 10.04 million and Foreign Exchange Earnings (FEEs) at 19.1 per cent to US$ 27.31
billion in 2017
◼ However, the sector underwent a slowdown in 2018 and 2019 before declining sharply in 2020
◼ India ranked 23rd in the world in terms of international tourist arrivals in 2019, falling slightly from
the 22nd position in 2018.
RECENT TRENDS
CONTINUED
◼ Foreign tourists from the top 10 countries visiting India are from Bangladesh, USA, UK, Australia,
Canada, China, Malaysia, Sri Lanka, Germany and Russia.
◼ They accounted for 67 per cent of the total foreign tourist arrivals in India in 2019
◼ Among the foreign tourists, 57.1 per cent tourists visited for leisure, holiday and recreation, 14.7 per
cent for business purposes, and 12.7 per cent was Indian diaspora.
◼ Top five states attracting domestic tourists are Uttar Pradesh, Tamil Nadu, Andhra Pradesh,
Karnataka, and Maharashtra, accounting for nearly 71 per cent of the total domestic tourist visits in
the country in 2019
◼ Top five states attracting foreign tourists are Tamil Nadu, Maharashtra, Uttar Pradesh, Delhi and
West Bengal, accounting for 69.4 per cent of the total foreign tourist visits in the country in 2019
CONTD.
◼ To facilitate international tourism, India introduced the e-Tourist Visa regime in September 2014 for
46 countries.
◼ Earlier available for only 12 countries
◼ The government further liberalized the visa regime in 2016, renaming it to e-Visa scheme with five
sub-categories i.e. ‘e-Tourist Visa’, ‘e-Business Visa’, ‘e-Medical Visa’, ‘e-Conference Visa’ and
‘e-Medical Attendant Visa’
◼ India ranked 34th in Travel and Tourism Competitiveness Index, improving significantly from its rank
of 65 in 2013
IT BPM SERVICES
◼ The Indian IT-BPM Industry has been the flag-bearer of India’s exports over the last 20 years
◼ While 1999-2000 to 2009-10 was a decade of growth, the last decade has been that of consolidation
and the industry succeeded in decoupling revenue and employee growth
◼ Over the last decade, the industry grew by 102 per cent reaching US$ 190.5 billion in revenues in
2019-20
◼ It also added 1.8 million employees, up 70 per cent over the last 10 years
IT EXPORTS
SPACE SECTOR
◼ India’s space programme has grown exponentially in the past six decades
◼ Expanded from simple mapping services in the 1960s to many diversified uses including- design and
development of a series of launch vehicles and related technologies, satellites and related technologies
for earth observation, telecommunication & broadband, navigation, meteorology and space science,
R&D in space sciences, & most recently, planetary exploration
◼ India spent about US$ 1.8 billion on space programmes in 2019-20
◼ India has launched around 5-7 satellites per year in the recent years
◼ Still lags behind major players in the sector, such as USA, China and Russia
◼ The Indian Space ecosystem is undergoing several policy reforms to engage private players and attract
innovation and investment.
REAL ESTATE (SOURCE: IBEF)
◼ It comprises of four sub sectors - housing, retail, hospitality, and commercial
◼ second-highest employment generator
◼ Bengaluru is expected to be the most favoured property investment destination for NRIs, followed by
Ahmedabad, Pune, Chennai, Goa, Delhi and Dehradun
◼ Witnessed high growth in the recent times with rise in demand for office as well as residential spaces.
◼ Attracted U$ 5 billion institutional investments in 2020
◼ Government of India along with the governments of respective States has taken several initiatives to
encourage development in the sector.
◼ The Smart City Project, with a plan to build 100 smart cities, is a prime opportunity for real estate
companies.
R&D
◼ India’s gross expenditure in R&D has tripled between 2008 & 2018
◼ The Gross expenditure on R&D (GERD) in the country has been consistently increasing over the
years and has nearly tripled
◼ India spent 0.7% of its GDP on R&D in 2017-18, while the same among other developing BRICS
countries was Brazil 1.3%, Russian Federation 1.1%, China 2.1% and South Africa 0.8%.
◼ Number of researchers per million population in India has increased
◼ During 2018, India was ranked at 3rd, 5th and 9th in scientific publication output as per the NSF,
SCOPUS and SCI database respectively
◼ India is ranked at 9th position in terms of Resident Patent Filing activity in the world in 2017-18
