The services sector is one of the fastest-growing sectors in the Indian economy. It has been integral to India’s overall liberalisation and structural reform programme, which was initiated in the 1980s and gained momentum after 1991. Domestic demand for services has increased as incomes have risen, triggering the expansion of industries such as banking, education, and telecommunications. Exports have also increased rapidly, led by information technology and business process outsourcing (IT-BPO). India’s ability to offer low-cost, high-quality IT-BPO services has made it a world leader in this industry. India’s government has supported the growth of service industries through a mix of deregulation, liberalization, and incentive programs. This paper provides an overview of the Indian services sector. It shows that services is the fastest growing sector in India, contributing significantly to GDP, GDP growth, employment, trade and investment. Over the years significance of services sector has increased. Its share in GDP is near to 60 per cent which reflects its importance in our economy. This paper also raises issues and challenges which are need to be addressed with regard to this sector.