India has officially introduced the Index of Services Production (ISP) to track monthly economic activity in its largest sector. This new tool covers industries contributing over 55% to the national economy, helping investors and policymakers monitor trends more accurately. The index uses a 2024-25 base year and will be released with a 60-day lag to provide a clearer view of real output.
The Ministry of Statistics and Programme Implementation (MoSPI) launched India's first Index of Services Production (ISP) on July 14, 2026. This move addresses a long-standing need for a high-frequency indicator to track the services sector, which acts as the primary engine of India's economic growth. While manufacturing output has been monitored monthly through the Index of Industrial Production (IIP), services data was previously limited to quarterly updates and fragmented reports.
Why the Services Sector Needs a Dedicated Index
Services now account for more than 55% of India's Gross Value Added (GVA). Despite this dominance, the lack of a monthly gauge made it difficult for investors and policymakers to understand short-term economic shifts. The ISP is built to mirror the IIP, offering a consistent way to measure real economic output by adjusting for inflation. The index uses 2024-25 as its base year to ensure data remains relevant and aligns with modern economic standards.
How the Data Is Collected
The index relies on digital infrastructure improvements made over the last decade. A major driver for this data is the Goods and Services Tax (GST) system, specifically monthly GSTR-1 filings, which provide a reliable proxy for turnover in sectors such as IT, telecommunications, retail trade, and hospitality. For industries where physical output is measurable, such as aviation and railways, the ministry uses specific metrics like passenger-kilometres. Additionally, the Annual Survey of Incorporated Services Sector Enterprises (ASISSE) provides data for sectors like private health and education that do not always fall under GST reporting.
Scope and Limitations
While the ISP is a major step toward better data transparency, it focuses primarily on the formal economy. It excludes public administration, defense, domestic help, and some government-run services. Because the index depends heavily on administrative and tax data, the informal sector—which remains a large part of the Indian economy—is not directly captured. Additionally, there is a 60-day lag in the release of this monthly data. Investors should note that while this provides better insight into the corporate and formal services space, it may not reflect the entirety of small-scale or cash-based service activity in the country.
What Investors Should Monitor Next
Moving forward, market participants will track the ISP alongside other macroeconomic indicators to gauge the health of the services-driven economy. As the index matures, the consistency of these monthly releases will be key to identifying early trends in banking, professional services, and transport. The success of this index will depend on the ministry's ability to maintain high data quality and provide timely updates, which will become a standard reference point for assessing domestic consumption and business growth.