The services sector witnessed a swift rebound in FY22, growing Year-on-Year (YoY) at 8.4% compared to a contraction of 7.8% in the previous financial year, highlighted the Economic Survey 2022-23, tabled by the Union Minister for finance & Corporate Affairs, Nirmala Sitharaman in Parliament on 31 January 2023. This swift rebound was driven by growth in the contact intensive services sub-sector which registered sequential growth of 16% driven by the release of pent-up demand, ease of mobility restriction, and near-universal vaccination coverage. "Indias services sector is a source of strength and is poised to gain more. From low to high value-added activities with export potential, the sector has enough scope to generate employment and foreign exchange and contribute to India's external stability", noted the Survey. As per the First Advance Estimates, Gross Value Added (GVA) in the services sector is estimated to grow at 9.1% in FY23, driven by 13.7% growth in contact-intensive services sector. The Survey highlighted that PMI services witnessed an uptick and expanded to 58.5 in December 2022, following an overall easing of retail inflation leading to retreating price pressures of inputs and raw materials. The Economic Survey observed that the bank credit to Services Sector saw a YoY growth of 21.3% in November 2022, the second highest in 46 months, with the improvement in vaccination coverage and recovery in the services sector. Within the sector, credit to wholesale and retail trade increased by 10.2% and 21.9% in November 2022, respectively, reflecting the strength of the underlying economic activity. "Credit to NBFCs grew by 32.9% as NBFCs shifted to bank borrowings because of high bond yields", stated the Survey. The Survey observed that India's services exports may improve as runaway inflation in advanced economies drives up wages and makes local sourcing expensive, opening up avenues for outsourcing to low-wage countries, including India. "India is a significant player in services trade, being among the top ten services exporter countries in 2021", noted the Survey. Services exports registered growth of 27.7% during April-December 2022 as compared to 20.4% in the corresponding period last year. Among services exports, software exports have remained relatively resilient during the Covid-19 pandemic as well as amid current geopolitical uncertainties, driven by higher demand for digital support, cloud services, and infrastructure modernisation catering to new challenges.

The World Investment Report 2022 of UNCTAD places India as the seventh largest recipient of FDI in the top 20 host countries in 2021. India received the highest-ever FDI inflows of US$ 84.8 billion including US$ 7.1 billion FDI equity inflows in the services sector in FY22. "To facilitate investment, various measures have been undertaken by the Government, such as the launch of the National Single-Window system, a one-stop solution for approvals and clearances needed by investors, entrepreneurs, and businesses", mentioned the Survey.