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Services

January, 2011

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 are collectively estimated to grow by 11 per cent in 2010-11 owing to major progress pertaining to passengers handled in civil aviation (14.9 per cent), air cargo (21.3 per cent) and stock of telephone connections (40.9 per cent) during April-November 2010-11.
  • Similarly, financing, insurance, real estate and business services is expected to show a growth rate of 10.6 per cent during 2010-11, on account of 14.0 per cent growth in aggregate deposits and 22.6 per cent growth in bank credit during April- November 2010 (against the respective growth rates of 18.6 per cent and 10.1 per cent in the corresponding period of previous year)
  • Community, social & personal services is estimated to grow by 5.7 per cent in 2010-11.

Indicators

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

  • Foreign tourist arrivals (FTAs) during Month of January 2011 were 5.38 lakh as compared to FTAs of 4.91 lakh during the month of January 2010 and 4.22 lakh in January 2009, as per the Ministry of Tourism data.
  • According to the Telecom Regulatory Authority of India (TRAI), the number of telephone subscribers in the country reached 787.28 million in December 2010 from 764.76 Million in November-2010, thereby registering a growth rate of 2.95 per cent. With this the overall tele-density (telephones per 100 people), touched 66.16.
  • According to the Indian Ports Association data major ports in India handled 468.27 million tonnes (MT) traffic during April 2010- January 2011, as compared to 463.25 MT handled during the same period last year, registering a growth of 1.1 per cent.
  • The total approximate earnings of Indian Railways on originating basis during April 2010 – January 2011 were US$ 16.68 billion (INR 76187.27 crore) compared to US$ 15.48 billion (INR 70696.03 crore) during the same period last financial year, registering an increase of 7.77 per cent.

    The total goods earnings have gone up by 6.57 per cent and total passenger revenue earnings expanded by 10.05 per cent during April 2010-January 2011.
  • Sales of commercial vehicles have registered a growth rate of 34.1 per cent whereas cargo handled by civil aviation has grown by 21.3 per cent and passengers handled by civil aviation has grown by 14.9 per cent during April-November 2010.

Exports

According to World Trade Organisation's (WTO) "International Trade Statistics 2010" released recently, India ranks twelfth in commercial service exports.

The HSBC Markit Business Activity Index, based on a survey of around 400 firms, rose to 58.1 in January 2011 from 57.7 in December.

The Indian IT-BPO sector is estimated to have grown by 19 per cent in 2010-11 to US$ 76 billion in revenues, according to software industry body National Association of Software and Service Companies (NASSCOM). Exports continued to be the mainstay of the industry with revenues of US$ 59 billion, growing at 18.7 per cent.

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$ 2,596 million between April and November 2010 while the cumulative FDI between April 2000 and November 2010 has been US$ 26,197 million, accounting for 21 per cent of the total FDI inflow.

Some of the investments in the service sector include:

  • Denmark-based ISS, a facility services provider, has acquired a 49 per cent stake in Chennai-based security firm SDB CISCO.
  • Travel, transport and logistics major IBS Software has entered into a five-year deal with TUI Group Airlines to provide support services.
  • Kolkata-based Keventer Group will form a joint venture with French analytical service major Groupe Carso for setting up a state-of-the-art food tasting laboratory in the state.