India’s services sector employs nearly 30% of the country’s workforce or 188 million people with trade, transport, education, travel and professional services sector hiring the most number of people in 2023-24, NITI Aayog said.
“Services employment rose to 29.7% in 2023-24 compared to 26.9% in 2011-12 with 40 million jobs created in the last six years,” the Aayog said in its report India’s Services Sector: Insights from Employment trends and State-Level Dynamics, released on Tuesday.
“However, it still lags the global average of 50%, reflecting a slower structural transition,” it said, suggesting the need for structural reforms, fast-tracking social protection, digitising informal worker registration and formalising care services to boost formal employment in the services sector.
As per the report, while services remain the mainstay of India’s employment growth and post-pandemic recovery, challenges persist. “Employment generation is uneven across sub-sectors, informality remains widespread, and job quality continues to lag behind output growth,” it said.
“Gender gaps, rural–urban divides, and regional disparities underline the need for an employment strategy that integrates formalisation, inclusion, and productivity enhancement at its core,” it added.
To bridge these gaps, the report outlines a four-part policy roadmap focusing on formalisation and social protection for gig, self-employed, and MSME workers; targeted skilling and digital access to expand opportunities for women and rural youth; investment in emerging and green economy skills; and balanced regional development through service hubs in Tier-II and Tier-III cities.
In another report, India’s Services Sector: Insights from GVA Trends and State-Level Dynamics released alongside, the Aayog said that the services sector has become the cornerstone of India’s economic growth, contributing nearly 55% of national gross value added (GVA) in 2024–25 up from 51% in 2013-14.
“While inter-state disparities in services sector shares have modestly widened, there is clear evidence that structurally lagging states are beginning to catch up,” it said.
According to the report, this emerging pattern of convergence suggests that India’s services-led transformation is gradually becoming more broad-based and spatially inclusive.
At the sectoral level, the report recommends prioritizing digital infrastructure, logistics, innovation, finance and skilling to accelerate diversification and competitiveness while at the state level, it recommends developing tailored service strategies based on local strengths, improving institutional capacity, integrating services with industrial ecosystems, and scaling up urban and regional service clusters.
“India’s services sector employment footprint reveals a striking paradox. While services absorb one-third of India’s workforce, most jobs are concentrated in traditional, low-productivity segments such as trade and transport, where informality and vulnerability dominate whereas high-value services like IT, finance, healthcare, professional services create disproportionate economic value, but employ relatively few workers,” the Aayog said in the report.
“This dual character of India’s services economy highlights the core challenge for the next two decades: to convert the sector’s dynamism into broad-based, high-quality employment,” it said, adding without structural reforms, these potential risks being squandered in a cycle of low-quality job expansion.
“Services employment rose to 29.7% in 2023-24 compared to 26.9% in 2011-12 with 40 million jobs created in the last six years,” the Aayog said in its report India’s Services Sector: Insights from Employment trends and State-Level Dynamics, released on Tuesday.
“However, it still lags the global average of 50%, reflecting a slower structural transition,” it said, suggesting the need for structural reforms, fast-tracking social protection, digitising informal worker registration and formalising care services to boost formal employment in the services sector.
As per the report, while services remain the mainstay of India’s employment growth and post-pandemic recovery, challenges persist. “Employment generation is uneven across sub-sectors, informality remains widespread, and job quality continues to lag behind output growth,” it said.
“Gender gaps, rural–urban divides, and regional disparities underline the need for an employment strategy that integrates formalisation, inclusion, and productivity enhancement at its core,” it added.
To bridge these gaps, the report outlines a four-part policy roadmap focusing on formalisation and social protection for gig, self-employed, and MSME workers; targeted skilling and digital access to expand opportunities for women and rural youth; investment in emerging and green economy skills; and balanced regional development through service hubs in Tier-II and Tier-III cities.
In another report, India’s Services Sector: Insights from GVA Trends and State-Level Dynamics released alongside, the Aayog said that the services sector has become the cornerstone of India’s economic growth, contributing nearly 55% of national gross value added (GVA) in 2024–25 up from 51% in 2013-14.
“While inter-state disparities in services sector shares have modestly widened, there is clear evidence that structurally lagging states are beginning to catch up,” it said.
According to the report, this emerging pattern of convergence suggests that India’s services-led transformation is gradually becoming more broad-based and spatially inclusive.
At the sectoral level, the report recommends prioritizing digital infrastructure, logistics, innovation, finance and skilling to accelerate diversification and competitiveness while at the state level, it recommends developing tailored service strategies based on local strengths, improving institutional capacity, integrating services with industrial ecosystems, and scaling up urban and regional service clusters.
“India’s services sector employment footprint reveals a striking paradox. While services absorb one-third of India’s workforce, most jobs are concentrated in traditional, low-productivity segments such as trade and transport, where informality and vulnerability dominate whereas high-value services like IT, finance, healthcare, professional services create disproportionate economic value, but employ relatively few workers,” the Aayog said in the report.
“This dual character of India’s services economy highlights the core challenge for the next two decades: to convert the sector’s dynamism into broad-based, high-quality employment,” it said, adding without structural reforms, these potential risks being squandered in a cycle of low-quality job expansion.
