Being one of the largest offshoring destinations for different IT companies across the world, the business process management market in India is of considerable importance. The information technology/business process management (IT-BPM) sector had contributed a share of seven percent to the GDP of the country in fiscal year 2024. And it was estimated by 2025, the share would increase to 10 percent. BPM is more like a discipline than a process that incorporates methods to improve, analyze, automate and improve business processes. Domestic and internationalIn the financial year 2023, the IT sector had an export value of more than 193 billion U.S. dollars. The IT software and services, the leading segment in the export. The sector has been generating big figures domestically as well. The employment generated from the IT-BPM industry in the country exceeded five million in financial year 2023. What does the future hold?With a mixture of BPM and robotic process automation (RPA) in the picture, enhanced partnerships with the rapidly growing IT and BPM industry in India are quite likely to happen. The industry has been generating increased revenue over the years, and presumably with the fast-growing pace of the sector, the revenue generation will also be on the rise.

In 2023, almost half of India’s GDP was generated by the services sector, a slight and steady increase over the last 10 years. Among the leading services industries in the country are telecommunications, IT, and software. The IT factorThe IT industry is a vital part of India’s economy, and in the fiscal year of 2016/2017, it generated about 8 percent of India’s GDP alone – a slight decrease from previous years, when it made up about 10 percent of the country’s economy. Nevertheless, the IT industry is growing, as is evident by its quickly increasing revenue and employment figures. IT includes software development, consulting, software management, and online services, and business process management (BPM). Employee migrationAlthough employment figures in IT, and thus in the services sector, are on the rise, most of the Indian workforce is still employed in agriculture, however, the figures show a trend pointing towards a reversal of this distribution. For now, the majority of Indians still do not live in cities – where IT jobs are generated – but urbanization is on the rise as well.

In 2023, India's manufacturing sector's GDP share was around 13 percent. The share remained the same as compared to the last year and declined from 17 percent in 2010. Value added is the net output of the manufacturing sector after adding all outputs and subtracting intermediate inputs. The manufacturing sector employs over 27 million workers. Boosting manufacturing As global economies aim to reduce reliance on China or adopt a China-plus strategy, India has emerged as a potent alternative manufacturing hub. The Make in India initiative was launched to foster and strengthen India’s global manufacturing status by enhancing foreign direct investments, skill development, and updating manufacturing infrastructure. Under the Production Linked Incentive (PLI) Scheme, companies are incentivized to promote domestic production and enhance manufacturing competitiveness. Despite efforts, experts expressed doubts about the government’s ambition to raise the share of manufacturing to GDP to 25 percent by 2025.
Hurdles for manufacturing As per the World Bank, India’s share in global trade has not kept pace with its rapidly growing economy. It is losing ground to countries like Bangladesh and Vietnam in key low-cost and low-skill manufacturing export sectors. Manufacturing productivity in India has remained low. and the availability of capital also remains an obstacle for the manufacturing sector. Inadequate investments in technology, infrastructure, and research and development (R&D) can also impact productivity growth. Other factors include regulatory compliance burdens, complex labor laws, red tape, and inefficient supply chains.

In financial year 2022, the contribution of domestic production value of electronics to Indian GDP was about 2.7 percent. This contribution share was estimated to increase to 4.7 percent by financial year 2026 in the country.

The Indian information technology and business process management industry was estimated to have over 5.4 million employees during financial year 2023. The South Asian country is the largest offshoring destination for IT companies across the globe. The IT-BPM sector has gradually grown in recent years, accounting for more than 30 percent of the global outsourced BPM market. In financial year 2023, the IT sector's contribution to India's GDP was 7.5 percent.

Market performance

In financial year 2022, the market size of the IT-BPM industry was estimated to reach around 177 billion U.S. dollars. The export market of the Indian IT-BPM industry was more than five times the size of the domestic market. The biggest importer of India’s IT-BPM services was the United States. Furthermore, the growth trend of the export market was evidently higher than the domestic market during the presented period. E-commerce revenue in the IT-BPM sector across the nation also witnessed steady growth in the last few years.

The road ahead

The Indian IT-BPM industry is likely to witness consistent growth in the future. Tapping into new advancements in robotics and artificial intelligence, the industry seeks to continue helping clients build successful businesses, propelled by a large export market.

In the financial year 2022, the contribution of the construction sector to the total economic output was 10.5 percent. According to the forecast, the contribution was likely to gradually reduce to 9.4 percent by 2030.

India's construction industry was valued at over 3.5 trillion Indian rupees in fourth quarter of 2023. This was a significant increase compared to previous years, when the value shrank due to the coronavirus (COVID-19) pandemic. The country’s construction and manufacturing industries were among the worst hit at the time. However, the industry seemed to recover quickly and returned to pre-crisis level again. 

Developments in other producing industries

The coronavirus (COVID-19) pandemic and the national lockdown from March to May 2020 had a differing impact on the producing sectors of the Indian economy. Similar to the construction industry, manufacturing reportedly shrunk in the second quarter of 2020. The agriculture sector did not witness a significant change, even showing higher employment numbers as a result of migrant workers returning to their homes. The utilities industry showed fluctuating values with a peak in the fourth quarter of 2021.

Impact of the construction industry

Infrastructure construction had been at the core of economic development in India in recent years. Between financial year 2016 to 2020, the manufacturing industry attracted the highest value of investments. The inflow of foreign direct investments into the infrastructure industries fluctuated over the last five years and amounted for around eight billion U.S. dollars in financial year 2021.  

The statistic shows GDP in India from 1987 to 2023, with projections up until 2029. In 2023, GDP in India was at around 3.57 trillion U.S. dollars, and it is expected to reach six trillion by the end of the decade. See figures on India's economic growth here, and the Russian GDP for comparison. Historical development of the Indian economy In the 1950s and 1960s, the decision of the newly independent Indian government to adopt a mixed economy, adopting both elements of both capitalist and socialist systems, resulted in huge inefficiencies borne out of the culture of interventionism that was a direct result of the lackluster implementation of policy and failings within the system itself. The desire to move towards a Soviet style mass planning system failed to gain much momentum in the Indian case due to a number of hindrances, an unskilled workforce being one of many.When the government of the early 90’s saw the creation of small-scale industry in large numbers due to the removal of price controls, the economy started to bounce back, but with the collapse of the Soviet Union - India’s main trading partner - the hampering effects of socialist policy on the economy were exposed and it underwent a large-scale liberalization. By the turn of the 21st century, India was rapidly progressing towards a free-market economy. India’s development has continued and it now belongs to the BRICS group of fast developing economic powers, and the incumbent Modi administration has seen India's GDP double during its first decade in power.

In 2024, the travel and tourism sector in India contributed around 9.1 percent to the total GDP of the country. This amounted to over 11.10 trillion U.S. dollars, and an increase of nearly 12.1 percent compared to the previous year.

India’s share of global gross domestic product (GDP) rose to 7.93 percent in 2023 when adjusted for purchasing power parity (PPP) and was projected to increase to 9.66 percent by 2029. This reflects the growth of India’s economy, which is helped in this ranking by the low purchasing power of the rupee. The Indian economy A significant portion of India’s economic growth comes from a shift in the workforce from the agricultural sector to the more-productive service sector. This labor force shift is particularly significant in India because of the country’s staggering population figures. As such, changes in the Indian economy have an impact on a significant portion of the world population. What does PPP mean? The Economist magazine uses the Big Mac Index to illustrate purchasing power. Since the product should be the same in every country that has a McDonalds, the Big Mac’s price should reflect the purchasing power of each local currency. For the calculation in this statistic, economists took the prices of several standard goods (though not the Big Mac) and put them at the same level based on their prices in the local currency. Thus, the power of these currencies to purchase was put on par across countries, giving purchasing power parity. As such, this statistic can be interpreted as the relative size of the Indian economy if the whole world used the Indian rupee price levels.

In 2023, the direct contribution of tourism & hospitality industry to India's GDP was over 231 billion U.S. dollars. This was forecasted to be 523 billion U.S. dollars by 2034. India had the second highest tourism GDP contribution in Asia-Pacific. Ever-growing industry    Travel and tourism is one of India’s largest economic sectors, ranking eighth among the leading countries in terms of direct contribution to GDP. As a dynamic sector, it was estimated to provide employment to over 81 million people in 2018, including both direct and indirect employment. Even though a variety of skilled jobs are offered in this sector, employment under passenger transportation has been the highest through the years. Tourism as revenue machinery Most of the tourism revenue in India comes from domestic tourists. However, India has witnessed an exponential rise in foreign exchange earnings since 2000, along with an increased inflow of foreign tourists into the country. Even though India is not among the top ten countries with the highest foreign tourism revenue, it is not too far behind. In recent years, the government has implemented new visa policies and advertised niche tourism products to boost tourism.

As of 2018, the ratio of profits from the corporate technology sector to India's GDP was around 0.42 percent. India has been known as a hub of information technology and evidently, the sector's contribution to the country's economy has been steadily growing over the last decade.

Overall, India’s corporate profit to GDP ratio dropped from 7.8 percent to three percent between 2008 and 2018.

In 2022, the travel and tourism industry in India contributed around 190 billion U.S. dollars to the country’s GDP. In 2022, the country welcomed over six million foreign tourists , generating foreign exchange earnings of over 16.93 billion U.S. dollars.

Domestic travel on the rise

With a rich culture, ancient monuments, and mesmerizing natural beauty, India is one of the leading tourist destinations in the world. This holds true not only for foreign tourists, but also for the increasingly monied middle-class of the country who are spending more time and money than ever before on domestic travel. In 2021, the domestic expenditure on tourism was around 150 billion U.S. dollars. The collective government spending on the tourism sector is expected to reach 5.65 billion dollars by 2028.

The cost of tourism

It comes as no surprise that out of the most visited monuments in India, the Taj Mahal in Agra ranks number one for both foreign as well as domestic tourists. Along with these popular tourist destinations, travellers are also exploring many other destinations in the country, like the pristine high-altitude plains of Leh and Ladakh or the lush green north-eastern forests. It now remains to be seen whether and how well the country manages to balance the influx of people with its efforts for the historical sites and natural resources conservation.

The publishing sector's revenue contribution to India's gross domestic product was 0.25 percent in 2019. This was a marginal increase from the GDP contribution in 2015, with the trend expected to continue as per forecasts for 2024. India's GDP in 2019 amounted to about 203 trillion Indian rupees.

As of 2024, Mumbai had a gross domestic product of 368 billion U.S. dollars, the highest among other major cities in India. It was followed by Delhi with a GDP of around 167 billion U.S. dollars. India’s megacities also boast the highest GDP among other cities in the country. What drives the GDP of India’s megacities? Mumbai is the financial capital of the country, and its GDP growth is primarily fueled by the financial services sector, port-based trade, and the Hindi film industry or Bollywood. Delhi in addition to being the political hub hosts a significant services sector. The satellite cities of Noida and Gurugram amplify the city's economic status. The southern cities of Bengaluru and Chennai have emerged as IT and manufacturing hubs respectively. Hyderabad is a significant player in the pharma and IT industries. Lastly, the western city of Ahmedabad, in addition to its strategic location and ports, is powered by the textile, chemicals, and machinery sectors. Does GDP equal to quality of life? Cities propelling economic growth and generating a major share of GDP is a global phenomenon, as in the case of Tokyo, Shanghai, New York, and others. However, the GDP, which measures the market value of all final goods and services produced in a region, does not always translate to a rise in quality of life. Five of India’s megacities featured in the Global Livability Index, with low ranks among global peers. The Index was based on indicators such as healthcare, political stability, environment and culture, infrastructure, and others.

As of 2018, the ratio of profits from the oil and gas sector to India's GDP was around 0.66 percent. The sector saw a drastic fall profit contribution from 1.17 percent in 2008 to 0.60 percent in 2013. However the large public sector undertakings in this sector ensure that its contribution to the economy will still be significant.

During the fourth quarter of 2024, the contribution of India's manufacturing industry to the country's GDP was nearly seven trillion Indian rupees. This was a decrease compared to the previous quarter, but still a much higher value than the third quarter of 2020, when the value decreased due to the coronavirus (COVID-19) pandemic. India's construction and manufacturing industries were among the worst hit then. But the manufacturing industry recovered quickly and reached pre-crisis level again after one quarter.

Retail accounted for the highest share in India's GDP at nearly 30 percent in financial year 2021 among service sectors. The retail sector was estimated to have a compound annual growth rate of 1.5 percent in fiscal year 2021. Food services and hotels expected to see a decline of nearly 30 and 43 percent respectively that year, owing to the impact of the COVID-19 pandemic.

In financial year 2024, Reliance Industries Limited contributed over 1.86 trillion Indian rupees to India's national exchequer. Reliance Industries Limited was the largest private sector company in the country by its market capitalization and profitability that year and as such their contribution to the country's gross domestic product was highly important.

As of 2018, the ratio of profits from the cement sector to India's GDP stood at 0.06 percent. This was a decrease from 2013, when the sector's contribution to the GDP was 0.10 percent. However, it was expected that the sector would gradually recover and regain momentum over the next five years. Overall, India’s corporate profit to GDP ratio dropped from 7.8 percent to three percent between 2008 and 2018.