As a consequence of the economic reforms, India’s productive structure has undergone notable changes over the last 15 years. Transformations in the production system led the services sector in 2007 to generate 55% of the GDP, industry 27% and agriculture 18%. Services use 27% of the working population, yet they generate 55% of the GDP and they also represent the sector with the highest growth rate. In the services sector as a whole, special mention must be made of the information and communications technologies sector (ICT). In this century, the sector is expanding in a sustained manner and growing at a yearly rate of 25%. The success of the ICT sector in India has had a significant impact on the country’s economic productivity. The arrival of the digital age and the new workforce with a high level of education and an ability to speak English has gradually transformed the country into an important destination for international companies looking for technological support.
The growth in value added in 2007 was as high in services as it was in industry and reached 11%. This growth has been possible thanks to the increase in domestic savings, which has come with an acceleration of the internal investment rate, which increased by 11 percentage points of the GDP between 2001 and 2007. The rapid improvement in saving levels and the acceleration in the formation of national capitals in recent years constitute more proof of the positive impetus for growth that has come from the structural reforms process.
The direct foreign investment flows have also been and are very important for maintaining investment levels at around 35% of the GDP to obtain an average yearly growth of around 9%. The Indian government is well aware that in order to continue to attract direct foreign investment, it needs qualified labour, good policies and good institutions. India has taken second place as the destination most favoured by direct foreign investment, preceded only by China (AT Kearney consultants). The United States is in third place.