The Role of Service Sector in the Creation of Knowledge-Based Economy in India

India is distinctive for the rapid growth of its service sector. It is a large and most dynamic part of the Indian economy both in terms of employment potential and contribution to national income. Service sector in India accounts for more than half of India's GDP. India is one of the fastest growing nations in global service trade, and is a major exporter of business services, particularly IT and information services. The country is the world leader in offshoring services. India remains the most frequently chosen location for contracting services and is the leading country in all rankings that focus on the delocation of services. As a result, India is witnessing a transition from agriculture-based economy to a service-based economy. The service sector plays an important role in building knowledge-based economy in India. The present article examines the importance of the service sector for the creation of knowledge-based economy in India. It is divided into three parts. Part One discusses the economic significance of the service sector in India. Part Two considers the role of information-intensive services in the creation of knowledge-based economy in India and Indian position as the offshore location. It also analyzes India's services exports, its composition, and revealed comparative advantage of various sectors of services. Part Three analyzes the conditions of the development of modern services industry in India.