Discover how India’s service sector leads export-led growth!
India’s service sector is a powerhouse, driving its export growth with a diverse portfolio of services ranging from travel, transport, and insurance to software IT.
The Government of India has set an ambitious target of $1 trillion in service sector exports by 2030.
While sectors like IT, ITeS, tourism, finance, and healthcare fuel the growth. But, significant growth is fueled through IT and related fields, as per government data.
Union Commerce and Industry Minister Piyush Goyal announced the Foreign Trade Policy for 2023 on 31st March 2023. The policy targets an increase in exports in the financial year 2022-23, with an estimated range of $760 to $770 billion, up from $676 billion in the previous financial year. The government aims to exceed $2 trillion in exports by 2030. Additionally, the service sector is expected to contribute significantly to the export growth, with predicted service sector exports of over $300 billion in the financial year 2022-23.
As per Business Standard, the service sector is a crucial factor in the dynamics of India’s exports. The total exports of the service sector have grown at a compounded annual rate of 5.7%, and at this pace, it’s likely to double in 12 years.
Additionally, other business services have grown at a compound annual rate of 8.7% and can double in just eight years.
The IT and ITES sector is the major contributor to India’s service sector exports, accounting for the highest share in the total service sector exports. In fact, in 2021-22, IT services alone accounted for almost half of the total service exports from India. There has been a significant increase in the size of IT services over time.
Service Export and IT Sector
India has established a robust presence in the global market when it comes to exporting services. The United States, the United Kingdom, and Japan are the top importers of Indian services. This is mainly due to India’s abundant workforce, low labour costs, and proficiency in English language skills. As a result, some of the most significant services exported by India include software, computers, IT, BPO, and call centres, which have been in high demand across the Americas, Europe, Asia, and the Gulf countries.
Besides, India’s services are also popular among countries in the Asia Pacific, Latin America, and Middle East Asia, as per IBEF. The top export markets for India include countries such as Hong Kong, Singapore, Germany, Bangladesh, Netherlands, and Nepal.
What’s in it for Investors?
The Indian government has taken various measures to boost exports. However, some tax-related issues still need to be addressed to support export growth. Despite these challenges, the government is seeking to capitalise on global opportunities to achieve the ambitious target of reaching $1 trillion in service sector exports by 2030.
In this pursuit, the IT services sector is set to play a pivotal role in the service sector exports.
That’s it for today. We hope you’ve found this article informative. Remember to spread the word among your friends. Until we meet again, stay curious!