Trial services index shows 10 of 19 sub-sectors post double-digit growth in July

India’s services activity showed sustained momentum in July 2026. Ten of the 19 tracked sub-sectors recorded double-digit year-on-year growth. Seven others also expanded, although air transport and repair services contracted. This points to a strong formal-services sector despite mixed manufacturing and trade signals.

The fastest-growing areas included administrative and support services at 20.9%, retail trade at 18.5%, real estate at 14.4%, accommodation and food at 12.6%, banking at 12.3%, and wholesale trade at 12.1%. Information technology grew 10.7%, while professional services rose 10.4%. Telecommunications increased 11%, and information and broadcasting grew 10%.

Transport results were mixed. Railways grew 7.5%, road transport 9.9%, and water transport 7.7%. Postal and courier services recovered to 8.7%. However, air transport declined 8.4%, partly because the West Asia conflict pushed energy prices higher. The broad expansion strengthens the case for tracking services monthly.

The Index of Services Production, or ISP, is a new monthly indicator for India’s formal services economy. It measures changes in the real output of services rather than physical goods. The government designed it as the services-sector equivalent of the Index of Industrial Production, or IIP.

The ISP covers activities including wholesale and retail trade, transport, banking, insurance, telecommunications, hotels and restaurants, real estate, information technology, professional services, administrative support, and arts and entertainment. It uses turnover as a production proxy because services are usually produced and consumed at the same time and cannot be stored like manufactured products.

The indicator matters because services generate over half of India’s economy. A monthly measure can reveal changes sooner than quarterly GDP estimates. It can also help policymakers, the Reserve Bank of India, businesses, and financial markets assess demand and sector trends using a more direct signal than indirect measures such as GST collections or purchasing managers’ surveys.

The ISP is broad, but it does not yet cover every service activity. Its 19 tracked sub-sectors represent about 60% of India’s services economy. This gives the index substantial reach while leaving room for future expansion.

Its coverage includes wholesale and retail trade, rail, road, air and water transport, banking, insurance, telecommunications, hotels and restaurants, real estate, information technology, professional and scientific services, administrative support, and arts, entertainment, and recreation. These sectors capture many formal business and consumer services that influence employment, investment, exports, and demand.

Some important activities are still outside the index. Private health and education services will be added when more comprehensive survey data become available. The index also excludes largely non-market activities, including public administration, defence, government health and education, household services, and certain social services. Therefore, the current ISP is significant but not a complete measure of all services production.

The government wants a monthly services index because services account for more than half of India’s economy and over 53% of gross value added. Yet economic assessment has often relied on quarterly GDP figures and indirect signals. The ISP supplies a more timely reading of what businesses and consumers are doing.

For GDP forecasting, monthly movements in trade, transport, banking, technology, hotels, and other services can reveal turning points before quarterly data arrive. For example, strong July growth in retail, administrative support, banking, and IT would provide evidence of continued activity. A contraction in air transport would offer a warning about pressure in a specific area.

The Reserve Bank of India can use this information to better judge demand conditions while framing monetary policy. Stronger demand may influence decisions about containing inflation, while weakening activity could support a more cautious approach. The ISP will not determine interest rates alone, but it adds a useful high-frequency indicator.

The July figures are part of the ISP’s fourth trial release, not yet a permanent official statistic. The government is using these early releases to validate the methodology and obtain feedback from stakeholders. This testing is important because the index combines many service industries with different data sources and operating patterns.

For now, MoSPI is releasing separate sub-sector indices rather than one composite ISP. Officials will assess whether these measures remain stable and resilient over time. They will also examine whether the data adequately represent the services economy and whether coverage can be improved. The first trial series covered April, followed by releases for May and June.

A single composite index will be released later, after this assessment and further coverage improvements. Private health and education are among the areas awaiting more comprehensive survey data. Once the methodology is validated, the ISP is expected to become part of India’s regular statistical releases and support routine economic monitoring.

Manufactured goods can be counted as they are produced, but services are usually produced and consumed simultaneously. They do not normally accumulate in inventories. The ISP therefore estimates service production mainly through turnover, which reflects the value of business activity during a month.

The index makes turnover more meaningful by adjusting it for inflation. GST data are especially useful because millions of businesses report outward supplies every month. MoSPI aggregates these records, maps them to National Industrial Classification codes, and applies suitable price indices to estimate real output for different sectors.

This approach gives the ISP a broad, timely data source covering formal businesses. It can capture changes in retail, wholesale, banking, technology, and other GST-linked activities without waiting for quarterly surveys. GST data do not cover every activity, however. For sectors outside the GST framework, including parts of railways, health, education, and some insurance activities, the index uses other available sources and methods.

In an economic index, real output measures changes in the amount of goods or services produced, not merely changes in their prices. It helps show whether activity genuinely increased. This distinction is essential when prices rise quickly, because businesses can collect more money without delivering more services.

For example, a transport company might receive 10% more turnover because fares or fuel-related charges increased. If the number of journeys stayed unchanged, its real output would not have grown by 10%. The ISP therefore uses price indices to deflate turnover and estimate the underlying volume or real value of service production.

This adjustment makes comparisons across months and years more meaningful. It prevents inflation from overstating services growth and gives policymakers a clearer view of economic momentum. The July ISP’s reported changes, such as 18.5% growth in retail trade and 10.7% in IT services, are intended to reflect real output after appropriate price adjustment rather than simple revenue increases.