Hospitality leads as MoSPI unveils India's first services production index

India's first trial Index of Services Production covers 19 sectors accounting for nearly 60 per cent of services output, with accommodation and food services leading April growth

The government on Tuesday released the trial Index of Services Production (ISP) for April for 19 sectors that together account for nearly 60 per cent of overall India’s services output.

 

Among the sectors, accommodation and food saw the highest growth of 37.2 per cent, compared to 0.7 per cent in April 2025. The sector that performed the worst was air transport, which contracted 14 per cent as against a 4.5 per cent increase in the corresponding period last year, showed data released by the National Statistics Office.

 

The accommodation and food sub-sector has a weight of 4.27 per cent in the index, lower than the heavyweights like IT (22.47 per cent), and retail trade (16.4 per cent).

 

D K Srivastava, chief policy advisor, EY India, said although an overall index of services production has not been given, considering the weighted growth, the growth of the 19 sectors was 20.8 per cent. He attributed the contraction in aviation to the West Asia crisis.

 

The trial ISP, with 2024-25 as the base year, is India’s first high-frequency statistical measure of monthly activity in services, filling a long-standing gap in the country’s economic indicators.

 

While the Index of Industrial Production (IIP) provides a monthly snapshot of industrial activity, there has been no comparable indicator for services, which account for more than half of India’s gross domestic product. 

 

MoSPI Secretary Saurabh Garg stressed that the ISP measures output rather than value added, cautioning against equating it with GDP growth. “The growth rates in GVA (gross value added) and the growth rates of output are different. GVA is what GDP measures. The services index is only an output indicator, not an indicator of value added,” he said.

 

Garg said the ISP also serves as a proxy for consumption in many services, since production and consumption occur simultaneously in these activities. “With services, they are consumed at the time they are produced. To that extent, we now have a retail sales consumption tracker for retail services,” he added.

 

Stressing the importance of deflators, Chief Economic Advisor V Anantha Nageswaran said since the index measures volumes and the raw data arrives as values, everything depends on how prices are adjusted. He urged users to focus on trends rather than reading too much into a single month’s data, describing the monthly index as “a thermometer, not a diagnosis.”

 

Nageswaran said monthly readings would fluctuate because the series is not seasonally adjusted, pointing to the typical spike in GST filings in March. “It will move about. It will be revised. The first few months will tell us less than the first few years,” he said.

 

For 2025-26 as a whole, accommodation and food services remained the fastest-growing segment with annual average growth of 35.6 per cent, followed by retail trade at 30.5 per cent, administrative and support services at 13.3 per cent, repair services at 25.1 per cent and wholesale trade at 23.6 per cent. Air transport was one of the weakest-performing sub-sectors with an annual average contraction of 4.4 per cent, while railway transport recorded average growth of 2.5 per cent.

 

The index is compiled using GST data for most services sub-sectors, administrative data for sectors such as transport, banking and insurance, and Annual Survey of Incorporated Services Sector Enterprises (ASISSE) data for assigning weights to the sectoral indices. The ministry attributed the spikes in the indices at the end of quarters and the fiscal year to the tendency of businesses to file their GST returns towards these reporting deadlines.

 

MoSPI is still working to incorporate health and residential care, education, and ownership of dwellings using administrative data, which would raise the index’s coverage to more than 80 per cent of the overall services sector before a composite index is introduced. The trial ISP will be released on the 29th of every month.

 

As for deflators, the statistics machinery has used the Wholesale Price Index (WPI) for wholesale trade and for other sub-sectors, either sub-sector specific CPI or a suitable proxy CPI has been used.