Finance Minister Nirmala Sitharaman on February 1 unveiled a Union Budget for 2026-2027 that places the services sector at the heart of India’s journey toward becoming a developed nation, or “Viksit Bharat”. The budget introduces high-level structural reforms and targeted fiscal incentives to transform India into a global hub for software, healthcare, and creative industries.
Services account for more than half of India’s gross domestic product and remain the country’s largest source of employment and export earnings. Budget proposals reflected an emphasis on productivity, technology adoption and global competitiveness, rather than large direct subsidies, as the sector continues to be driven by private investment.
Digital & Technology-led Services
- The budget underscored the growing importance of digital public infrastructure in supporting services-led growth. Continued support was outlined for platforms enabling digital payments, e-governance and data-driven service delivery.
- The government said technology would act as a force multiplier for efficiency in sectors such as finance, logistics, agriculture advisory and public administration.
- Artificial intelligence and emerging technologies were highlighted as enablers for services exports, with initiatives aimed at expanding digital skills, improving job matching and integrating technology into education and training systems.
Financial Services & Capital Markets
- In financial services, the budget reiterated the government’s focus on improving credit flow, deepening capital markets and strengthening regulatory frameworks. Measures aimed at improving ease of doing business for financial institutions and encouraging wider participation in formal financial systems were positioned as key to sustaining consumption and investment-led growth.
- The government also highlighted the role of financial services in mobilizing long-term capital for infrastructure, green transition and urban development, reinforcing the sector’s linkages with broader economic priorities.
Tourism, Travel & Hospitality
- Tourism continued to feature as a major employment-generating service sector. Budget proposals focused on destination development, connectivity and capacity-building, with the aim of positioning India as a year-round global tourism destination.
- The government said investments in infrastructure, digital services and skill development would support both domestic and international tourism growth.
Logistics & Trade-related Services
- Logistics and trade facilitation were identified as critical services to enhance India’s competitiveness in global supply chains. The budget reiterated support for multimodal logistics parks, port-led development and technology-enabled customs processes to reduce transaction costs and turnaround times.
- Improved logistics services are expected to support manufacturing, exports and e-commerce, with the government aiming to bring down logistics costs as a share of GDP over the medium term.
Skills, employment & Global Services Ambition
- Skill development remained a core theme, with a focus on aligning training with industry needs in areas such as information technology, digital services, animation, visual effects, gaming and emerging creative industries. The government reiterated its intention to build a future-ready workforce capable of supporting services exports.
- A high-powered standing committee was proposed to chart a roadmap for expanding India’s share in global services exports, with a long-term target of achieving a double-digit global market share by 2047.
Key Takeaway
Economists said the budget signals policy continuity for the services sector, with emphasis on technology, skills and regulatory stability rather than large fiscal outlays. As India’s economy evolves, services are expected to remain the primary driver of growth, employment and exports, anchoring the country’s journey towards becoming a developed economy over the next two decades.