Marking a major shift in India’s trade, services exports are projected to overtake goods shipments in Nov, latest figures shared by the commerce department on Monday showed.
After months of sustained increase, last month’s services exports have been provisionally estimated at $35.7 billion, compared with $32.1 billion of merchandise or goods exports.
“Services are doing well, and we expect exports to reach $1 trillion in the coming years,” said commerce secretary Sunil Barthwal. Typically, the commerce department puts out an estimate or a projection for services the previous month while releasing the goods trade numbers. Then, RBI releases its estimates. For instance, RBI has estimated Oct services exports at $34.3 billion, compared with the commerce department’s projection of $34 billion when the goods trade data was released last month.
Services have held steady as Global Capability Centres (GCCs) have more than made up for the muted rise in IT and IT-enabled exports, with management, legal and accounting services also seeing healthy growth. In contrast, goods trade has been hit by the slowdown in Europe and other parts of the world due to high inflation as well as conflict in west Asia and Ukraine.
Currently, software is the big daddy of services, accounting for 47% of exports last year, with nearly 70% heading to the US.
Going forward, govt is seeking to make it more balanced. The commerce department has identified six services – IT and IT-enabled services, business services, maritime services, tourism, audio visual, gaming and related services and digitally delivered health and education – for special focus. “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 told TOI.
For instance, govt is looking at how GCCs can be given further impetus, or how maritime can help Indian companies not just service global clients but also help in delivering Indian goods across the seas, especially when it has been identified as a strategic sector. Tourism is seen as a big opportunity, given that there are a plethora of destinations to showcase and can create a large number of jobs.
“This number (Nov) should not surprise anyone. Higher services growth has been a consistent trend and is now resulting into higher export values,” said Ajay Srivastava, who leads research body GTRI, while identifying other business services as the rising star.
While goods exports can once again overtake services in the coming months, GTRI has projected that going by the current growth trends from 2018-19 to 2023-24, by 2029-30 services exports will reach $618.2 billion, edging past merchandise exports, which are projected at $613 billion.
Over the last 11 years, services trade has grown faster than goods, not just for India but globally. And, India has outpaced global growth on both fronts. In its latest update, UNCTAD said that global trade is projected to reach a record $33 trillion, rising 3.3% this year, with services notching up 7% growth.