India’s services sector has entrenched itself as the key engine of economic growth, surging from a 40 percent share of GDP in the 1990s to a commanding 55 percent of gross value added (GVA) in FY25. According to the Axis Mutual Fund’s Service Sector Report, this transformation positions the sector as a pillar of India’s $5 trillion economy target.
The report highlights how diversified verticals—including information technology, financial services, healthcare, telecommunications and e-commerce—have scaled at an unprecedented pace over the past two decades. IT services alone expanded from $8 billion in 2000 to $245 billion in FY24, with projections reaching $300 billion by FY26. The financial landscape has been reshaped by digital transformation, as evidenced by mutual fund assets under management growing at over 20 percent compound annual growth rate to reach ₹72.19 lakh crore (USD 864.5 billion) by May 2025.
Healthcare witnessed sharp momentum, with the sector expected to grow to $370 billion by 2027, propelled by a 62 percent year-on-year expansion as of March 2025. In telecom, data consumption has skyrocketed 450-fold since 2014, reaching an average of 28 GB per user per month in 2025. The e-commerce segment, which stood at $103 billion in 2024, is projected to triple to $325 billion by 2030.
The report notes that India’s nominal GDP has doubled over the last decade, reaching approximately $3.97 trillion in FY25 and is expected to hit $4.19 trillion by year-end. This growth has created fertile ground for services-led development.
Contributing factors include policy reforms under the Digital India programme, improved ease of doing business, relaxed foreign direct investment norms, and targeted sector-specific incentives. These have helped services transition from legacy support roles to high-growth innovation drivers, underpinning India’s future-ready economy.
