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Services

May, 2010

The services sector has been at the forefront of the rapid growth of the Indian economy.

As per the Central Statistical Organisation (CSO), Ministry of Statistics and Programme Implementation:

  • Trade, hotels, transport and communication grew 12.4 per cent in Jan-March 2010 over the corresponding quarter from a year earlier
  • Similiarly, financing, insurance, real estate and business services grew at 7.9 per cent in the fourth-quarter of 2009-10
  • Community, social & personal services grew by 1.6 per cent in the fourth quarter

Indicators

Lead indicators suggest that the pace of expansion in the services sector activity is likely to be sustained.

  • Foreign tourist arrivals (FTAs) during January to April 2010 were 19.18 lakh, an increase of 10.6 per cent, over 17.35 FTAs over the corresponding quarter in 2009
  • According to the Telecom Regulatory Authority of India (TRAI), the number of telephone subscribers in the country reached 621.28 million as on March 31, 2010, an increase of 3.38 per cent from 600.98 million in February 2010. With this the overall tele-density (telephones per 100 people), touched 52.74
  • Cargo handled at major ports during April–March 2010 has been 560.96 million tonnes as against 530.53 million tonnes during April-March 2009
  • According to the Central Statistical Organisation, the key indicators of railways, namely, the net tonne kilometres and passenger kilometres have shown growth rates of 12.5 per cent and 6.7 per cent, respectively in the third-quarter of 2009-10
  • Production of commercial vehicles has projected an immense growth rate of 195 per cent whereas cargo handled by civil aviation has grown by 19.6 per cent and passengers handled by civil aviation has grown by 22.2 per cent in the third-quarter of 2009-10

According to an HSBC survey, HSBC Markit Business Activity Index, based on a survey of 400 firms, rose to 62.1 in April 2010.The services index has expanded robustly for the twelfth month in April 2010.

Exports

According to World Trade Organisation's (WTO) "International Trade Statistics 2009" released in November 2009, India ranks ninth in commercial service exports.

According to the Economic Survey 2009-10, services exports reached US$ 102 billion in 2008-09 registering a growth of 12.5 per cent over 2007-08. The miscellaneous services category share has increased by 16.1 percentage points to 76.4 per cent in 2008-09 as compared to 2000-01. While the share of software services increased by 6.5 percentage points to 45.5 per cent, the share of non-software services increased by 9.6 percentage points to 30.9 per cent in 2008-09.

According to the Department of Information Technology, the share of information technology enabled services (ITeS) and business process outsourcing (BPO) exports has expanded. The total ITeS-BPO exports is estimated to have risen from US$ 1.5 billion in 2001-02 to US$ 12.7 billion in 2008-09, a CAGR of about 39.2 per cent. BPO now accounts for about 27 per cent of total exports.

Investments

According to data released by the Department of Industrial Policy and Promotion, the services sector (financial and non-financial) attracted foreign direct investments (FDI) worth US$ 4.4 billion between April and March 2009-10 while the cumulative FDI between April 2000 and March 2010 has been US$ 23.6 billion, accounting for 21 per cent of the total FDI inflow.

Some of the investments in the service sector include:

  • Tata Consultancy Services (TCS), the country's largest software exporter by revenue, was awarded a contract in March 2010 to administer the UK's National Employee Savings Trust (NEST) scheme's administered services under a 10-year deal, worth around US$ 906 million.
  • Aditya Birla Minacs, the information technology business solutions firm, has acquired UK-based Compass BPO, a finance and accounting (F&A) services provider
  • India's largest back office firm, Genpact, has acquired US-based analytics and data management services provider, Symphony Marketing Solutions (SMS)