In News:

The Ministry of Statistics and Programme Implementation (MoSPI) recently released findings from a pilot study on the Annual Survey of Services Sector Enterprises (ASSSE). This initiative aims to fill a crucial data gap regarding India’s incorporated service sector, which is not currently covered by regular surveys like the Annual Survey of Unincorporated Sector Enterprises (ASUSE).

Significance of the Services Sector

• Contribution to Economy: The services sector contributed ~55% of India's Gross Value Added (GVA) in FY 2024–25, up from 50.6% in FY14.
• Employment: It employs around 30% of India’s workforce, spanning industries like IT, finance, education, tourism, and healthcare.
• Trade: India’s services exports stood at USD 280.94 billion (April–Dec 2024). In ICT services, India is the 2nd-largest global exporter, accounting for 10.2% of global exports.
• FDI Magnet: The sector attracted USD 116.72 billion in FDI (April 2000–Dec 2024)—about 16% of total FDI inflows.
• Support to Digital India & Urbanization: The sector underpins the Digital India initiative and Smart Cities Mission by enabling digital payments, urban mobility, e-governance, and waste management.

About the ASSSE Pilot Study

Purpose & Objectives

• To test the suitability of the GSTN (Goods and Services Tax Network) database as a sampling frame.
• To develop robust survey instruments and methodology for a full-scale annual survey starting January 2026.
• To gather data on economic characteristics, employment, and financial indicators from incorporated enterprises under:
  • Companies Act, 1956/2013
  • Limited Liability Partnership (LLP) Act, 2008

Survey Coverage

• Conducted in two phases:
  • Phase I (May–Aug 2024): Verified enterprise data for 10,005 units.
  • Phase II (Nov 2024–Jan 2025): Collected detailed data from 5,020 enterprises under the Collection of Statistics Act, 2008.
• Data collected for FY 2022–23 using CAPI (Computer-Assisted Personal Interviewing).

Key Findings:

Enterprise Type Distribution

• Private Limited Companies: 82.4%
• Public Limited Companies and LLPs: ~8% each

Size-Class Analysis (FY 2022–23)

Output Class (?)      % Share of Gross Value Added (GVA)      % Share of Fixed Assets         % Share of Employment

< 10 crore                    1.19%                                                                   2.64%                                        9.28%

10–100 crore              9.45%                                                                 9.58%                                        20.03%

100–500 crore          19.90%                                                                25.00%                                      33.73%

> 500 crore                69.47%                                                                              62.77%                                                36.96%

• Large enterprises (output > ?500 crore) dominate in assets, value addition, and compensation paid, but smaller units employ over 63% of the total workforce in the sample.

Additional Establishments

• 28.5% of enterprises reported having additional business locations within the state.
• Highest in the Trade sector (41.8%).

Insights and Challenges from the Pilot

• Suitability of GSTN as Sampling Frame: Confirmed.
• Challenges Faced:
  • Data retrieval from enterprises with headquarters in other states.
  • Centralized data (CIN-based) posed difficulty in disaggregating state-level data.
• Positive Outcomes:
  • High response rate and cooperation.
  • Survey instruments found largely clear and functional.

Challenges Faced by the Services Sector

• Skill Gaps:
  • Only 51.25% of youth are employable (Economic Survey 2023–24).
  • Merely 5% of workforce is formally skilled (WEF).
• Informality:
  • About 78% of service jobs were informal in 2017–18.
  • Gig workers lack social protection.
• Global Competition:
  • Visa restrictions (e.g., H-1B in the US).
  • Competing hubs: Philippines, Vietnam.
  • Rising IT wage costs in India.
• Infrastructure Deficiencies:
  • Inadequate AI/ML adoption.
  • Digital divide persists in rural and marginalized MSMEs.
• Post-COVID Recovery:
  • Inbound tourism yet to reach pre-pandemic levels (90% of 2019 arrivals in H1 2024).

Way Forward

• Upskilling Initiatives:
  • Expand Skill India Digital and PMKVY 4.0.
  • Promote Prime Minister Internship Scheme (PMIS) for bridging academia-industry gap.
• Boosting Global Competitiveness:
  • Negotiate FTAs with EU, UK, Australia.
  • Expand Global Capability Centres (GCCs).
• Digital Infrastructure & Security:
  • Strengthen cybersecurity frameworks and promote secure cloud adoption.
  • Improve digital literacy, especially in financial services.
• Decentralized Growth:As per NITI Aayog, promote services sector in Tier-2 and Tier-3 cities with better infrastructure and connectivity.