NITI Aayog released twin reports on India's services sector in October 2025, sounding a sharp warning about a "low-wage trap" threatening the country's 188 million services workers. The reports titled "India's Services Sector: Towards Global Leadership" and "Formalisation of the Services Sector" were jointly released by NITI Aayog with support from the Ministry of Commerce and Industry.
The reports reveal that 73% of India's 188 million services sector workforce remains informal, lacking access to social security, provident fund, health benefits, and job stability. This structural informality suppresses wages, reduces productivity, and limits the sector's potential to drive inclusive growth. The average daily wage in informal services is estimated at ₹350–500, far below the formal sector benchmark.
A central recommendation of the reports is formalisation of the services workforce through GST registration drives, EPFO onboarding, UDYAM registration for micro-service enterprises, and linking of service providers to government digital platforms like ONDC (Open Network for Digital Commerce). The reports also highlight the role of skill development through apprenticeship programmes and sector-specific training under the Skill India Mission.
The reports also identify Tier-II and Tier-III cities — including Jaipur, Jodhpur, Kota, and Udaipur in Rajasthan — as potential services hubs that could absorb rural-to-urban migrants and reduce pressure on metro cities. Investment in digital connectivity, co-working infrastructure, and local IT parks in these cities could create 5–7 million formal services jobs over the next decade.
India's services sector contributes approximately 55% of GDP and accounts for 45% of total exports. The IT/BPM, financial services, healthcare, and education sub-sectors are identified as high-growth areas. Formalisation, the reports argue, would unlock productivity gains equivalent to 1.5–2% additional GDP growth annually, while also expanding the tax base.