New Delhi — India’s services-focused economic growth model is emerging as more resilient compared to China’s manufacturing-heavy approach, according to a media report, as the country continues to maintain its position as the world’s fastest-growing major economy.
An article in One World Outlook highlighted that India’s growth is being driven largely by sectors such as technology, finance, digital infrastructure, and professional services. This diversified services-led structure is considered less vulnerable to global trade disruptions and domestic economic imbalances that often impact manufacturing-dominated economies like China.
China’s rapid economic rise was historically powered by its manufacturing sector, which once accounted for nearly 36 to 40 per cent of its GDP. By 2025, this share is estimated to have declined to around 25 per cent, reflecting a gradual transition toward higher-value services that now contribute more than half of the country’s GDP. However, manufacturing remains central to China’s exports, supports employment for over 100 million workers, and plays a key role in its global economic influence.
Despite achieving record trade surpluses in 2025 by expanding exports to emerging markets, China’s manufacturing-driven model faces several structural challenges. These include overcapacity, dependence on external demand, a struggling property sector, and weak domestic consumption. While industrial output remained strong, manufacturing investment slowed in the latter part of 2025 amid global trade uncertainties.
In contrast, India’s services sector has steadily strengthened its contribution to the economy. During 2024-25, services accounted for nearly 55 per cent of the country’s Gross Value Added (GVA), up from around 51 per cent a decade ago. Financial services, real estate, and professional services contributed approximately 23 per cent, while trade, hospitality, transport, and communication services accounted for about 18 per cent.
India’s early investments in human capital and widespread English proficiency have played a significant role in expanding its IT and business process management (IT-BPM) sectors. Software services exports have recorded annual growth of around 13 to 14 per cent in recent years. Overall services exports doubled their pre-pandemic growth pace, reaching nearly 14 per cent between FY23 and FY25. India has now become the world’s seventh-largest services exporter, with its global share rising from 2 per cent in 2005 to 4.3 per cent in 2024. Professional consulting and management services have grown even faster, registering growth of nearly 26 per cent.
The expansion of India’s financial and fintech ecosystem has further strengthened economic stability. The Unified Payments Interface (UPI) has transformed digital transactions, handling more than 20 billion transactions monthly. With over 500 million users, UPI’s low-cost and interoperable platform has boosted financial inclusion and supported digital commerce, contrasting with China’s privately controlled digital payment ecosystems such as Alipay and WeChat Pay.
Professional services such as consulting, legal advisory, and management services are also providing high-value exports that are less vulnerable to supply chain disruptions. Unlike manufacturing, which requires heavy capital investment and is often affected by trade barriers and geopolitical tensions, these services can expand through digital delivery using India’s skilled workforce.
While China’s manufacturing model remains crucial for large-scale employment and industrial output, it faces risks from protectionist policies, heavy investment dependence, and slower transition toward services. India’s services-driven model, though challenged by limited large-scale job creation compared to manufacturing, is considered more adaptable in an increasingly digital and knowledge-based global economy.
The report suggests that India’s strong presence in technology, artificial intelligence, and digital services positions it well for sustained long-term growth, especially as global demand for technology-enabled solutions continues to rise.
With inputs from IANS