Economic Analysis of the Service Sector in India and China (1990-2025): Structural Transformation, Factor Productivity, and Sub-Sectoral Performance Gaps

This study provides comparative analysis of the economic performance, structural transformation, and factor productivity of the service sectors in India and China from 1990 to 2025. In 1990, both nations possessed tertiary sectors of virtually identical output scale: India generated $132.80 Billion in service Gross Value Added (GVA) (41.5% of GDP), while China generated $114.50 Billion (31.8% of GDP). By 2025-26, services expanded over 54% of aggregate GDP in both economies. However, Chinas total tertiary output surged to S10.65 Trillion compared to Indias S2.17 Trillion, generating an immense $8.48 Trillion scale gap. Utilizing Solow-Jorgenson Translog KLEMS growth accounting framework and Cobb-Douglas production functions across 11 disaggregated service sub-sectors, this paper investigates the drivers behind this structural divergence.