SERVICE SECTOR IN INDIA

The service industry forms a backbone of social and economic development of a region. It has emerged as the largest and fastest-growing sectors in the world economy. Its growth rate has been higher than that of agriculture and manufacturing sectors. India ranks fifteenth in the services output and it provides employment to around 23% of the total workforce in the country.

 The Services Sector contributes the most to the Indian GDP for it accounts for around 60-65% in 2010. The various sectors under the Services Sector in India are : Hotels, Transport, Communication and storage, Social and personal services, Insurance & financing, Business services.

The Sector of Services in India has the biggest share in the country's GDP

CONTRIBUTION OF SERVICE SECTOR IN INDIAN ECONOMY

2010

GDP USD 1.36 trillion GDP growth rate 9%

Services contribution 60-65%

Balance of Trade Negative balance should increase with surging imports versus exports Investment goal USD 370 billion

2008

GDP USD 1.16 trillion GDP growth rate 9.5% Services contribution 60% Balance of Trade Negative balance should increase with surging imports versus exports Investment goal USD 305 billion 2006 GDP USD 590 billion GDP growth rate 9% Services contribution 54% Balance of Trade USD (-)46.2 billion Investment goal USD 250 billion

Growing GDP
1,200 1,000 800 600 400 191 200 0 103 105 453
Contribution of Services increased from 48% to 62% and is estimated to contribute 60% by 2010

USD Billion

682

398 237 125 105 204 135 2005-06 Industry

231 145 2006-07 Services

287 167 2010*

1999-00 2002-03 Agriculture

The Hotel Industry

Hotels form one of the most important support service that affect the arrival of tourist to a country. The major players in the industry are Indian Hotels Company Ltd (IHCL). There are around 1000 classified hotels and the total room availability is pegged at 97,000 rooms.

Hotels are classified into six categories according to the star rating assigned by the Department of Tourism.
About 30% of the rooms fall under the 5-star deluxe categories.

S.W.O.T ANALYSIS OF HOTEL INDUSTRY

Strengths A very wide variety of hotels is present in the country that can fulfill the demand of the tourists. There are international players in the market such as Taj and Oberoi & International Chains.

Manpower costs in the Indian hotel industry is one of the lowest in the world. This provides better margins for Indian hotel industry.

 Weaknesses
The cost of land in India is high at 50% of total project cost as against 15% abroad.

High tax structure in the industry makes the industry worse off than its international equivalent.
The services in Indian hotel is not world standards.

Opportunities
Unique experience in heritage hotels. Demand between the national and the inbound tourists can be easily managed due to difference in the period of holidays.

 Threats
Guest houses replace the hotels. Political turbulence in the area reduces tourist traffic and thus the business of the hotels. Lack of training man power in the hotel industry.

Thank you