India’s Services Sector Set To Overtake Merchandise Exports By 2030: GTRI

ENA Sectors 2024-11-21 17:18:09 New Delhi, Nov 21 (KNN) India stands on the cusp of a transformative economic milestone, with its services sector projected to surpass merchandise exports by fiscal year 2030, reaching an impressive USD 618 billion, according to a comprehensive report by the Global Trade Research Initiative (GTRI) released Wednesday. The trajectory of India's export landscape reveals a compelling narrative of growth and potential. Between 2018-19 and 2023-24, merchandise exports experienced a compound annual growth rate (CAGR) of 5.8 percent, while services exports demonstrated remarkable momentum, expanding at a robust 10.5 percent CAGR. This differential underscores the burgeoning strength of India's service-oriented economic strategy. At the heart of this growth are two pivotal sectors: Software & IT services and Other Business Services (OBS). These domains collectively represented 86.4 percent of the country's total exports in the previous fiscal year, highlighting their critical role in India's economic ecosystem. OBS, encompassing diverse professional services such as legal, accounting, tax consultancy, and management consulting, generated USD 102.8 billion in 2023-24, constituting 33.2 percent of total services exports. The software and IT services segment emerges as a particularly robust contributor, generating USD 190.7 billion in exports during 2023-24 and accounting for 56.2 percent of total services exports. Notably, approximately 80 percent of these services are delivered digitally, reflecting the sector's technological sophistication and global reach. GTRI Founder Ajay Srivastava emphasised the transformative potential of emerging technologies like generative AI, machine learning, and the Internet of Things. These technological frontiers are expanding opportunities for Indian firms, driving innovation and global demand for specialised expertise. The global context further amplifies the potential of India's services sector. Other Business Services (OBS) represent a massive global market, reaching USD 1.8 trillion in 2023 and constituting 25.4 percent of world services exports, compared to software and IT services' USD 762 billion (10.7 percent). However, the report also highlights critical challenges, particularly India's heavy reliance on the United States market. Currently, 70 percent of India's IT export revenue comes from the US, exposing the sector to potential policy shifts and economic uncertainties. Srivastava advocated for strategic diversification, emphasising the need to explore new markets and focus on high-value services like digital transformation and AI integration. Looking forward, the GTRI recommends a multipronged approach. This includes promoting OBS exports, raising awareness among professionals about global opportunities, and targeting service categories with high trade volumes but low domestic participation, such as transport, travel, maintenance and repair, insurance, and financial services. As India navigates this evolving economic landscape, the services sector stands as a beacon of potential, promising not just growth, but a fundamental reimagining of the country's global economic engagement. (KNN Bureau) 39997 https://knnindia.co.in/news/newsdetails/sectors/indias-services-sector-set-to-overtake-merchandise-exports-by-2030-gtri 2024-11-21 17:18:09 knnindia.co.in India’s Services Sector Set To Overtake Merchandise Exports By 2030: GTRI