New Delhi: India should facilitate more visas for skilled professionals to boost growth in the Information Technology (IT) Services sector, the Economic Survey 2025-26 has stated. Further, it has recommended recognising the unique requirements of data centres—access to green energy, tax clarity for digital services, reskilling, and a supportive policy environment for innovation and scaling.
The Economic Survey 2025-26 has found a robust growth in the services sector amid global uncertainties. The sector contributed more than half of India’s Gross Value Added (GVA), serving as a major driver of exports and employment. “The services sector, acting as a high-growth, low-volatility anchor, marked seven-eight percent growth, year after year, in sharp contrast to the more pronounced cyclical fluctuations observed in agriculture and industry,” the survey has stated.
From 7.6 percent in the pre-pandemic period (FY16-FY20) to 14 percent in FY23-FY25, the average increase in services exports more than doubled, indicating a robust and widespread demand for Indian services worldwide. The report has said that the services export growth moderated to eight percent in FY26 (April-November) amid competitive conditions in international services markets and increased policy uncertainties.
Union Minister for Finance and Corporate Affairs Nirmala Sitharaman tabled the report in the Parliament Thursday.
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Services segments
With an average growth rate of 13.5 percent in FY23-FY25 compared to 4.7 percent in FY16-FY20, software services—more than 40 percent of all services exported—remained the key growth engine due to the robust demand for digital services, the survey has found. With a growth rate of 25.9 percent professional and management consulting emerged as the second-largest contributor, increasing its share from 10.5 percent in FY16-FY20 to 18.3 percent in FY23-FY25.
The report has pointed out a key trend in the IT-ITeS industry: the transition to higher-value products and capability-driven growth.
Further, funding for deep-tech increased by 78 percent in calendar year (CY) 2024, the document has said, citing Nasscom data.
There are currently between 32,000 and 35,000 startups in India’s technology startup ecosystem—the third largest in the world. Over 2,000 new startups, including over 900 sponsored start-ups, were added in calendar year (CY) 25. The Generative AI market has grown quickly within this, with active GenAI startups more than tripling from roughly 240 in January-June 2024 to over 890 by January–June 2025.
The funding around tech start-ups has also been gradually increasing since CY23. In January–June 2023, tech start-ups received $606 million in funds, with this figure now touching $990 million in January–June 2025.
The services segment within the tech start-ups also received higher funding at seven percent in January–June 2025, compared to four percent in the same period in 2023.
Role of states
Multiple states contributed to the expansion of the GenAI landscape. While Karnataka appeared as a familiar name, states like Maharashtra, Haryana, Delhi, Telangana, Tamil Nadu and Uttar Pradesh also showed rapid growth in the emergence of these start-ups, the 2026 economic survey has found.
Global demand for productivity-boosting solutions powered by generative AI, cloud adoption, cybersecurity, and data engineering is clearly a structural shift rather than a cyclical disruption, the report has said.
However, it has pointed out that though India’s ranking among 170 economies in UN Trade and Development (UNCTAD)’s Frontier Technology Readiness Index has improved from 48th in 2022 to 36th in the most recent assessment (2024), lower results in ICT penetration and skills indicated by the same index highlight limitations in the wider diffusion of frontier technologies across firms and regions. The main obstacle is prompt reskilling and worker and company adaptation to changing business models.
To realise this potential, the foundations for innovation-led, capability-intensive growth must be strengthened through a workforce that is knowledgeable and flexible, a broader adoption of digital technologies, and a legislative climate that encourages innovation and scaling, the 2026 economic survey has said.
Certain interventions can be rather simple. For example, instead of classifying data centres and cloud service providers as “commercial buildings” under the National Building Code, 2016, which ignores their unique design requirements, they should be recognised as a separate category. More anonymised public data could be made available to take advantage of scalable cloud-based digital public infrastructure while having strong security standards in place, the report has added.
(Edited by Madhurita Goswami)
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