The present paper analyzes the main drivers of growth of the services sector in India. The focus is on the interdependence of the services sector on manufacturing sector and vice versa. Shift-share analysis shows that the change in productivity of services sectors is mainly due to within-sector rather than inter-sector effects. Input–Output analysis reveals that although the existing service output levels are heavily dependent on inter-industry intermediate use, the growth of such services depends vitally on final demand in most cases. Technological changes in many sectors has reduced per unit requirement of services but the scale effect dominates so that a rising final demand has to be supplemented by larger intermediate demand for services—the latter sometimes labelled as servicification of manufacturing sector. It emerges that while a deliberate push to manufacturing will be a boon to services as well, the growth of the services sector will promote larger use of the same in many manufacturing sectors and at the same time create more demand for manufacturing goods through inter-industry backward linkage effect.