Services account for more than half of India’s gross value added, yet policymakers have long lacked a monthly indicator comparable to the Index of Industrial Production (IIP) for tracking activity in the sector. That gap is beginning to close. The Ministry of Statistics and Programme Implementation (MoSPI) started releasing a trial Index of Services Production (ISP) in July 2026, with the latest print covering July activity.
The fourth trial print, covering July, gives an early indication of what the new index can add to economic analysis. Activity increased year-on-year in 17 of the 19 sub-sectors covered by the index, compared with 18 in June, while 10 recorded double-digit growth, against eight a month earlier. Administrative and support services grew 20.9%, followed by retail trade at 18.5% and real estate at 14.4%. Accommodation and food services grew 12.6%, banking 12.3%, telecommunications 11%, and professional, scientific and technical services 10.4%.
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Those figures point to a broad expansion, but they also show how uneven services activity can be beneath the aggregate number. Real estate growth, for example, fell from 24.7% in June to 14.4% in July. Growth in warehousing and support activities for transportation eased from 11.8% to 9.8%. Repair services moved from 7.5% growth in June to a 5% contraction in July, while air transport contracted for a fourth consecutive month, with the decline widening from 6% to 8.4%. The value of the ISP will therefore lie partly in showing where services activity is gaining or losing momentum, rather than simply producing another headline growth rate.
Why India needed an Index of Services Production
The absence of a monthly services indicator has been a longstanding weakness in India’s economic statistics. MoSPI says the services sector has contributed more than 50% of GVA since 2013-14. Yet detailed information on services activity has generally been available at lower frequency or with longer lags than the indicators available for industry.
The ISP is intended to complement the IIP by providing high-frequency information on changes in the volume of services output. That can improve economic monitoring, forecasting and analysis of the business cycle. For policymakers, the advantage is not merely another headline growth rate. A monthly index can show whether changes in economic activity are concentrated in trade, transport, financial services, real estate, business services or other parts of the economy.
That distinction is important because the services sector is not a single economic activity. A rise in retail sales does not necessarily tell us what is happening in air transport. Strong growth in professional services says little about repair activity. The July figures make this variation visible.
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Measuring services is harder than measuring factories
Building such an index has taken time because service output is harder to observe than industrial production. A factory can report tonnes of steel, cars produced or units of electricity generated. Many services have no comparable physical measure of output and are consumed soon after they are produced.
MoSPI identifies three longstanding obstacles: limited high-frequency administrative data, the heterogeneous nature of services and the lack of suitable service-sector price indices. The expansion of GST data has helped address the first of these problems. The ISP uses administrative data for some sectors and GST outward-supply data for a large number of others.
For most sectors covered by the GST-based system, MoSPI uses the value of outward supplies as an indicator of output and then adjusts it for price changes to obtain a measure of real output. The choice of deflator varies by sector. Wholesale trade uses the Wholesale Price Index, while sector-specific consumer price indices are used where available. In other cases, MoSPI uses broader consumer price measures.
This distinction is important because an increase in the revenue of a hotel, retailer or professional services firm does not necessarily mean that it produced a proportionately larger volume of services. Higher prices can raise turnover without a corresponding increase in real output. The ISP attempts to separate those effects.
For transport, measurement can be more direct. Railways and air transport use physical measures of activity rather than relying entirely on turnover. Passenger and freight volumes can therefore provide a closer measure of changes in output.
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ISP: A useful index with important limits
The ISP should not yet be treated as a complete measure of India’s services economy. MoSPI explicitly describes the current series as experimental. It primarily reflects the formal sector because much of the index is based on outward supplies reported by GST-registered enterprises.
Several activities are outside the present coverage. Public administration and defence, some financial services, personal services, membership organisations and services provided by private households are excluded. Government-provided health and education are also outside the current index. MoSPI plans to incorporate health and education, excluding government activity, using data from the Annual Survey of Incorporated Services Sector Enterprises.
The price data present another limitation. International statistical practice generally prefers service producer price indices for deflating service output. India has such indices for only a limited number of service sectors, and some are available only quarterly. MoSPI therefore uses consumer price indices or other broader measures where producer price indices are unavailable.
These limitations do not make the index redundant. They explain why the series is being released on a trial basis. MoSPI says the experimental releases will allow it to assess the stability and resilience of the data and obtain feedback before regular compilation.
The longer the series becomes, the more useful it should be. A few months of data cannot establish whether a sharp movement represents a structural change or ordinary volatility. A longer history can help identify recurring seasonal patterns and distinguish temporary fluctuations from sustained changes in activity.
The July numbers already show the value of that exercise. Seventeen of 19 sectors expanded, yet the gap between administrative and support services growing 20.9% and air transport contracting 8.4% is too wide to be captured meaningfully by a single description of services growth.
India has needed a monthly measure of services production for years. The trial ISP is a beginning. Its usefulness will ultimately depend on how its coverage, price measures and historical series improve. But even in its present form, it gives economists and policymakers a more detailed monthly view of an economy in which services have become the largest component of output.