The Performance of Services Sector in India for Sustainable Development: Prospects and Challenges in the Age of Artificial Intelligence

Abstract

India's service sector has emerged as a key driver of economic growth and structural transformation over the past three decades. With its increasing contribution to Gross Domestic Product (GDP), employment, and exports, the sector holds significant potential for advancing the sustainable development. According to the Economic Survey 2024-25, service sector grew at 8.3% from the financial year 2023 to the financial year 2025 which accelerated economic growth and sustainability in a significant way. The crisis of global pandemic and the repercussions of geopolitical wars transformed the path of the landscape of the Indian service sector. The recent technological advancements in the service sector like the rise of digital platforms, increased automation of routine tasks, the use of artificial intelligent tools and cloud computing etc. has become the key factors which control the performance of service sector of the Indian economy today. Artificial Intelligence (AI) is changing the face of Indian service sector, automating processes, enabling smarter decision-making, and opening up new business models. AI is reshaping India’s service sector, making it smarter, faster, and more inclusive. While it creates high-value jobs, it also demands urgent reskilling, policy support, and ethical frameworks to ensure the transition.