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

New Delhi: Ten of the 19 sub-sectors tracked by India's new Index of Services Production (ISP) recorded double-digit growth in July 2026 from a year earlier, while seven others also expanded, signalling sustained momentum in formal-sector services despite mixed signals from manufacturing and external trade.

The data were part of the fourth trial release of the ISP, unveiled by the government on Tuesday with 2024-25 as the base year. The index marks a significant overhaul of India's economic statistics and provides policymakers with a long-awaited monthly measure of activity in the services sector, which accounts for more than half of the economy.

The 19 sectors account for about 60% of the services economy. The single composite ISP will be released later, after assessing the stability and resilience of the sub-sectoral indices and improving their coverage, the ministry of statistics and programme implementation (MoSPI) said in a statement.

The monthly series is expected to improve short-term gross domestic product (GDP) forecasting, help the central bank better gauge demand conditions while framing monetary policy and provide businesses with an additional tool to monitor sectoral trends.

Top sub-sectors reporting continued strong growth in July include accommodation and food (12.6%), retail trade (18.5%), administrative and support services (20.9%), Banking (12.3%), wholesale trade (12.1%) and real estate (14.4%).

Air transport services contracted 8.4% from a year earlier in July as the West Asia conflict drove energy prices higher. Repair services also contracted, shrinking 5% during the month. Postal and courier as well as and information and broadcasting services that were in the negative zone in earlier months expanded by 8.7% and 10%, respectively, in July.

Rail transport growth recovers

According to the MoSPI data, rail transport growth recovered in July, expanding 7.5% while road transport services grew by 9.9% and water transport by 7.7%. The wholesale trade grew by 7.7% during the month. Telecommunication, banking and insurance sectors expanded by 11%, 12.3% and 8.9%, respectively.

In July, information technology (IT) and computer-related services grew by 10.7%, professional, scientific and technical services, including research and development, expanded by 10.4%, administrative and support services by 20.9% and arts, entertainment and recreation services by 1.7%.

The ISP covers the formal services economy, including wholesale and retail trade, transport, banking, insurance, telecommunications, hotels and restaurants, real estate, information technology, professional services, administrative support services and arts and entertainment. Private health and education services will be incorporated later as more comprehensive survey data become available.

The index excludes largely non-market activities such as public administration, defence, government health and education, household services and certain social services.

The ISP has been designed as the services-sector equivalent of the Index of Industrial Production (IIP), giving the government, the Reserve Bank of India (RBI) and financial markets a high-frequency indicator to assess economic activity instead of relying largely on quarterly GDP estimates and indirect proxies such as GST collections, purchasing managers’ indices (PMIs) and bank credit.

The MoSPI released the first trial series of the ISP for April on 14 July. In the inaugural series, 14 out of the 19 sub-sectors posted double-digit year-on-year growth. The second series for May was released on 29 July, which showed eight of the 19 sub-sectors posting double-digit growth. The third trial ISP for June was released on 29 August, which also showed eight of the 19 sub-sectors registering double-digit growth.

Initially to validate methodology

The government has said that the trial series would initially be released to validate methodology and obtain stakeholder feedback before the index becomes part of India's regular statistical releases.

The new indicator arrives as services have emerged as the principal driver of India’s economic growth, accounting for over 53% of gross value added (GVA) and contributing significantly to employment, exports and investment.

Unlike the IIP, which measures physical production in manufacturing, mining and electricity, the ISP captures changes in the real output of services. Since services are generally produced and consumed simultaneously and do not accumulate inventories, the index primarily uses turnover as a proxy for production after adjusting for inflation.

The biggest methodological innovation is the extensive use of goods and services tax (GST) data.

Every month, millions of businesses report outward supplies under the GST system. These aggregated records are mapped to National Industrial Classification (NIC) codes and deflated using appropriate price indices to estimate real output. For sectors outside the GST framework—including parts of railways, health, education and certain insurance activities—the index relies on administrative databases and the Annual Survey of Incorporated Services Sector Enterprises.

With the launch of the ISP, India's statistical architecture now offers high-frequency production indicators for both manufacturing and services, providing policymakers and investors with a more comprehensive picture of the country's evolving economy.