Chapter 4 discusses the origins of India’s service sector advantage. Although modern industries developed in the colonial period and the policy of public sector led industrialization after independence led to the development of industries producing consumer, capital and intermediate goods, the share of the sector in employment has remained low. Industry in India did not place the same role in structural transformation as it did in the context of European industrializers and in China today. The service sector in India has been the most productive sector historically. Labour productivity in services in early twentieth century was higher than in industry. Labour productivity in industry grew faster until the 1980s, thereafter service sector has led productivity growth. The service sector today has a concentration of workers with secondary and tertiary education. But this was also the case historically. The education policies in colonial India prioritized secondary and tertiary education for a few at the cost of universal primary education. This continued after independence. The service sector led growth in India today has historical origins.