Telangana’s Digital Growth Story: How Hyderabad Became the Nucleus of India’s New-Age Services Economy

Hyderabad’s rise as one of India’s most dynamic urban economies is no accident. Over the last decade, Telangana has quietly built a digital-first model that blends technology, innovation, and entrepreneurship into the very fabric of its economic growth. Now, that success story finds validation in the latest NITI Aayog report titled “India’s Services Sector: Insights from GVA Trends and State-Level Dynamics” — which places Telangana among the top service-driven states in the country.

According to the report, Telangana’s economy has evolved around a digitally oriented model centred on Hyderabad’s thriving IT and startup ecosystem. With an average services share of 60.3%, the state’s economy is deeply intertwined with its innovation corridors — an impressive reflection of how startups, real estate, and professional services have coalesced to create a robust economic engine.

Hyderabad: A City That Thinks Digital

Hyderabad’s transformation into a powerhouse of digital innovation has been driven by a strong ecosystem of enablers — from the globally renowned T-Hub to TASK (Telangana Academy for Skill and Knowledge) and T-Works, India’s largest prototyping centre. Together, they’ve created fertile ground for entrepreneurs, engineers, and innovators to experiment, scale, and thrive.

The NITI Aayog report notes that real estate, ownership of dwellings, and professional services contribute 34.1% to Telangana’s services output. This reflects not only Hyderabad’s rapid urban expansion but also the concentration of high-value professional clusters — from legal and architectural consultancies to IT service providers.

Telangana’s trade and repair services, which account for 21.5%, underline the strength of its consumer economy. Retail networks and rising post-pandemic consumer demand have powered a 20.8% annual growth in trade and hospitality during 2023–24, signalling a full-fledged recovery and renewed market confidence.

Meanwhile, education, healthcare, and personal and community services — though contributing a relatively modest 12.9% to Gross State Value Added (GSVA) — continue to play a crucial role in building the state’s social and employment infrastructure.

From 52% to 62%: Telangana’s Leap Beyond the National Average

Over the past decade, Telangana’s services share in GSVA has risen sharply — from 52.8% in 2011–12 to 62.4% in 2023–24 — outpacing the national average. This surge mirrors the state’s commitment to digital infrastructure, IT exports, and professional services concentrated around Hyderabad’s Hi-Tech City, now symbolic of India’s modern urban ambition.

The city’s rise is not just about technology; it’s about the seamless integration of governance and growth. By nurturing startups, supporting infrastructure, and promoting skill development, Telangana has built a self-sustaining ecosystem that’s not just scaling fast but also scaling right.

The Broader Picture: How Telangana Stacks Up

While Telangana’s story stands out, it’s part of a larger national trend. States like Karnataka, Tamil Nadu, Kerala, and Maharashtra have also emerged as key service-oriented economies, each driven by their unique urban and industrial strengths.

Maharashtra, for instance, with its twin growth centres of Mumbai and Pune, follows closely with an average services share of 56%. The state’s growth is powered by finance, IT, real estate, and media — industries that have long made it India’s economic capital.

At the same time, the report highlights that India’s services-led growth remains geographically uneven. Urbanisation and digital readiness have determined the pace and depth of growth across regions. Union Territories like Delhi and Chandigarh, with over 85% share of services, embody the dominance of modern urban economies. Encouragingly, even Northeastern states such as Meghalaya, Manipur, Nagaland, and Arunachal Pradesh have begun recording notable growth in services — a promising sign of inclusivity in India’s economic transformation.

Services and Prosperity: The Income Link

NITI Aayog’s findings reveal a strong connection between the size of a state’s services economy and its income levels. States and UTs with developed service sectors — including Delhi, Chandigarh, Karnataka, Telangana, and Maharashtra — consistently report higher per capita incomes, buoyed by high-value activities in IT, finance, and professional services.

In fact, Karnataka, Maharashtra, Tamil Nadu, and Telangana together contributed nearly 40% of India’s total services output in 2023–24, underscoring how a handful of digitally advanced states are shaping the country’s new economic map.

Telangana: A Blueprint for the Future

What makes Telangana’s model stand out is its blend of policy foresight, startup energy, and digital infrastructure. By betting early on tech-led development and encouraging innovation-led public initiatives, the state has positioned itself not just as a regional hub, but as a national blueprint for digital-first economic transformation.

From bustling co-working spaces in HITEC City to government-backed incubation centres nurturing deep-tech startups, the state’s ecosystem reflects the perfect synergy between policy and progress.

In a country where services now account for over half of the national GSVA, Telangana’s experience shows how building a digitally empowered, startup-driven economy can reshape not just growth metrics — but the very idea of what modern India looks like.