Foreign Direct Investment is a tool for economic growth through its strengthening of domestic capital, productivity and employment. FDI also plays a vital role in the up gradation of technology, skills and managerial capabilities in various sectors of the economy. The flow of FDI in India’s service sector is boosting the growth of Indian economy, this sector contributing the large share in the growing GDP of India.The various sectors under the Services Sector in India are Financial and Banking Services, Insurance, Research and Development, Non-Banking and Business Services, Outsourcing, Courier, Technical Testing and Analysis and other services.This paper highlights the role of FDI in various sub sectors of services sector and its contribution to the growth of Indian economy year wise. FDI equity inflows into India’s services sector over the period of five years commencing from 2013 to 2017 have been taken for the study which is purely secondary data. Tools used to investigate the relationship between FDI inflows in services sectorand Gross Domestic Product are CAGR, Percentage Analysis and Correlation. This analysis has revealed that Foreign Direct Investment has moderate impact on GDP.

KEYWORDS: Foreign Direct Investment, Service Sector, Gross Domestic Product.