India’s service sector pushes $5 trillion economy dream

New Delhi

India’s service sector is playing a big role in helping the country move closer to its goal of becoming a $5 trillion economy, says a new report by Axis Mutual Fund released on Monday.

The report highlights that the service sector's contribution to India’s GDP has grown from 40 percent in the 1990s to about 55 percent in FY25. In FY14, this share was around 50.6 percent, showing steady and strong growth over the years.

Key areas like information technology (IT), finance and banking, healthcare, telecommunications, and e-commerce have seen major growth. IT services jumped from $8 billion in 2000 to $245 billion in FY24 and are expected to reach $300 billion by FY26.

The finance sector also expanded rapidly, with mutual fund assets under management (AUM) growing over 20 percent per year to reach Rs 72.19 lakh crore by May 2025. Healthcare is booming too, expected to touch $370 billion by 2027, with a 62 percent growth reported in March 2025 alone.

The telecom sector saw a massive rise in data use, growing 450 times since 2014 to 28 GB per user each month in 2025. Meanwhile, e-commerce is set to triple from $103 billion in 2024 to $325 billion by 2030.

India’s nominal GDP nearly doubled over the past decade, reaching $3.97 trillion in FY25 and expected to climb to $4.19 trillion by year-end.

The report credits rapid digital growth, the ‘Digital India’ program, simpler business rules, easier foreign investments, and special government incentives for this rise. These efforts have created a strong foundation for the service sector to keep growing and support India’s big economic goals.