India is emerging as the world’s fastest-growing major economy, thanks to a resilient services-led growth model that offers stability in an increasingly uncertain global environment. Unlike China, whose growth has historically been driven by manufacturing, India’s economy benefits from strong technology, finance, digital infrastructure, and professional services sectors, making it more adaptable to global shocks.
Services: The Core of India’s Resilience
In 2024‑25, the services sector accounted for nearly 55% of India’s Gross Value Added (GVA), up from around 51% a decade earlier. Key contributors include:
-
Financial, real estate, and professional services: ~23% of GVA
-
Trade, hotels, transport, and communications: ~18% of GVA
India’s early investments in human capital and English-language skills have enabled explosive growth in IT and business process outsourcing (BPO). The IT-BPM sector, a major driver of export revenues, has seen software services grow at 13–14% annually, while professional consulting and management services surged by nearly 26%, making India the world’s seventh-largest services exporter.
This strong performance has created a stable inflow of foreign exchange, cushioning India against merchandise trade volatility and global economic disruptions.
Technology and Digital Finance as Growth Multipliers
India’s digital infrastructure, especially the Unified Payments Interface (UPI), exemplifies its services-led edge. Processing over 20 billion transactions monthly across 500+ million users, UPI ensures low-cost, seamless, and interoperable digital payments. This system fosters financial inclusion, promotes fintech innovation, and provides economic stability, contrasting with China’s private-dominated digital payments ecosystem led by Alipay and WeChat Pay.
Professional Services: High-Value, Low-Risk
Consulting, legal, and advisory services add tradable, high-value components to India’s economy, less vulnerable to global supply chain shocks. Unlike manufacturing, these sectors scale digitally, require lower capital intensity, and are less affected by tariffs or geopolitical tensions.
China’s Manufacturing Model: Strengths and Vulnerabilities
China’s manufacturing sector has historically powered its rise, contributing 36–40% of GDP in earlier decades, though it declined to about 25% by 2025. While exports remain robust, with diversification to emerging markets, this manufacturing-heavy model faces cyclical risks:
-
Overcapacity in industrial production
-
Dependence on external demand and global trade
-
Property sector slowdown
-
Weaker domestic consumption
China’s industrial investment slowed in the latter half of 2025 amid trade uncertainties, highlighting the vulnerabilities of a capital-intensive, export-driven growth strategy.
Global Economic Shifts and India’s Advantage
The global economic landscape has changed dramatically. The era of deep globalization—characterized by integrated supply chains and free trade—has given way to protectionism, tariffs, and export controls, particularly for critical raw materials like semiconductors, rare earths, and advanced technologies. Geopolitical tensions and regional conflicts have disrupted supply chains and raised costs worldwide.
In this environment, India’s services-dominated economy offers greater resilience:
-
Less exposure to cyclical industrial shocks
-
Flexibility to scale in digital and knowledge-based sectors
-
Stable foreign exchange inflows through IT and professional services exports
Looking Ahead: The Future of India’s Growth
India’s services tilt positions it well for the coming decade, especially amid AI adoption, digital transformation, and global demand for technology-enabled solutions. Sustained reforms in skills development, digital infrastructure, and regulatory frameworks could further strengthen India’s global competitiveness, while China continues to rebalance its economy toward services and higher-value activities.
In essence, India’s growth story reflects adaptability, innovation, and strategic foresight, highlighting a shift from traditional manufacturing-driven expansion to a modern, resilient services economy capable of weathering global uncertainties.