Why is the Tertiary Sector Growing So Rapidly in India

India’s economy has undergone a significant transformation over the last few decades. One of the most striking features of this change is the rapid growth of the tertiary sector, also known as the services sector. This sector includes industries such as information technology (IT), finance, retail, education, tourism, healthcare, and more.

Key Reasons Behind the Rapid Growth of the Tertiary Sector in India

1. Economic Liberalisation and Globalisation

After 1991, India opened its markets to global players. This reform allowed foreign investments and spurred the growth of private enterprises, particularly in the service sector such as IT, BPO, banking, and insurance.

2. Growth of Information Technology and Communication

India became a global hub for IT and software services. Cities like Bengaluru, Hyderabad, and Pune emerged as major IT centers, employing millions of professionals and attracting foreign clients due to skilled manpower and cost efficiency.

3. Urbanisation and Rising Incomes

Rapid urbanisation led to increased demand for services like transportation, entertainment, healthcare, and retail. As incomes grew, so did consumer spending on various services.

4. Increased Investment in Education and Skill Development

Improved access to education, technical training, and English proficiency equipped India’s workforce for jobs in high-value service industries like finance, consulting, IT, and design.

5. Government Policies and Infrastructure Support

Schemes like Digital India, Startup India, and Skill India supported entrepreneurship, digital adoption, and skill development in the services sector.

6. Growth of E-commerce and Digital Services

The rise of e-commerce platforms (like Amazon, Flipkart) and digital payment systems (UPI, Paytm) revolutionised retail, logistics, and banking, driving tertiary sector growth even in Tier 2 and Tier 3 cities.

7. Tourism and Hospitality Expansion

India’s rich cultural heritage, medical tourism, and spiritual destinations contributed significantly to the services sector, especially in states like Kerala, Rajasthan, and Uttarakhand.

Comparison of the Three Economic Sectors in India

Sector	Activities Included	Contribution to GDP (2024 Est.)	Employment Share
Primary	Agriculture, fishing, mining	~18%	~42%
Secondary	Manufacturing, construction	~28%	~25%
Tertiary	IT, finance, healthcare, education, etc.	~54%	~33%

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