India's services exports are projected to surpass goods exports as early as November, with estimates showing $35.7 billion in services versus $32.1 billion in goods. Commerce Secretary Sunil Barthwal noted, "Services are doing well, and we expect exports to reach $1 trillion in the coming years." Growth is driven by Global Capability Centres and robust sectors like IT and tourism. GTRI forecasts services exports may reach $618.2 billion by 2029-30, outpacing goods exports.
In a significant development for India's economy, projections indicate that services exports will surpass goods exports as early as November. According to the latest data released by the commerce department, services exports for last month are estimated at an impressive $35.7 billion, compared to $32.1 billion in merchandise exports.
"Services are doing well, and we expect exports to reach $1 trillion in the coming years," commented Commerce Secretary Sunil Barthwal. Traditionally, the commerce department releases estimates for services alongside goods trade figures. For instance, the Reserve Bank of India (RBI) has estimated October's services exports at $34.3 billion, slightly above the commerce department’s prior projection of $34 billion.
The steady growth in services has been bolstered by the rise of Global Capability Centres (GCCs), which have compensated for slower growth in IT and IT-enabled exports. Additionally, sectors such as management, legal, and accounting services are experiencing robust expansion. In contrast, goods exports have faced challenges due to economic slowdowns in Europe and other regions, exacerbated by high inflation and geopolitical tensions.
Notably, the software industry remains a powerhouse, contributing 47% to services exports last year, with nearly 70% of this business directed towards the United States. Looking ahead, the government aims to create a more balanced trade environment. The commerce department has pinpointed six key service sectors for special attention: IT and IT-enabled services, business services, maritime services, tourism, audio-visual services, and digitally delivered health and education. "We are preparing a strategy to push growth in these sectors, factoring in the demand as well as the skill and scale that we have in the country," an official shared.
The government is exploring ways to enhance the role of GCCs and leverage maritime services to not only serve global clients but also facilitate the export of Indian goods, recognizing this as a strategic area. Tourism is another sector identified as holding significant potential, with numerous attractive destinations that could generate a substantial number of jobs.
"This number (Nov) should not surprise anyone. Higher services growth has been a consistent trend and is now resulting in higher export values," noted Ajay Srivastava, leader of the research organization GTRI, highlighting other business services as emerging stars.
While it's possible that goods exports may regain the lead in the coming months, GTRI forecasts that by 2029-30, services exports could reach $618.2 billion, surpassing merchandise exports projected at $613 billion. Over the past 11 years, services trade has consistently outpaced goods trade, both in India and globally. According to UNCTAD's latest report, global trade is expected to hit a record $33 trillion this year, with services growing by an impressive 7%.
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