Introduction
The services sector in India is the largest contributor to the country’s economy. It accounts for over 50% of the GDP of India. The services sector in India comprises trade, tourism, aviation, telecom, shipping, ports, communication and storage, financing, insurance, transportation, real estate, business services, software services, IT-BPM, etc. The sector is essential for India’s economy as the direct employment in the IT services and BPO/ITeS segment was estimated to reach 5.4 million in FY23 with an addition of 290,000 people. The IT industry accounts for about 7.5% of India’s GDP and has a share of more than 52% global outsourcing market. The tourism and hospitality services industry in the country picked up sharply after the COVID-19 pandemic. In FY23, the tourism sector in India accounted for 35 million jobs, a growth of 8.3% over the previous year.
India is the fifth-largest recipient of FDI inflows with the services sector being one of the highest FDI recipients in the country. From April 2000-December 2023, the sector’s FDI inflows were US$ 108.04 billion, accounting for over 16% of the country’s total FDI inflows.
Export Trend
India's economy is largely dependent on the services exports. The country exports various services, namely, travel, transportation, insurance, software – IT-BPM, business services, financial services, and communication, etc. The value of exports for FY23 was US$ 325.44 billion as compared to US$ 254.52 billion in FY22, registering a positive growth of 27.86%. The total export of services from India in 2020-21, was US$ 209.35 billion. During 2022-23, the trade surplus for Indian services exports was US$ 145.29 billion, a 35.14% rise from 2021-22.
From April-February 2023-24 the total exports of services were estimated to be US$ 314.82 billion, a 6.75% rise as compared to the same period the previous year. The services exports of India during February 2024 were estimated at US$ 32.15 billion. This was a growth of 17.33% from February 2023.
The IT-BPM was the largest exported service out of India accounting for about 49% of the total service exports during the first half of 2021-22. The share of business services, transportation services, travel services, and financial services during April-September 2021 was 23%, 12%, 3%, and 2%, respectively. Business and transportation services are also among India's top exported services comprising about 23% and 11% of the total services exports, respectively.
According to estimates by the Electronics and Computer Software Export Promotion Council (ESC), exports of IT-ITeS registered a year-on-year growth of 12.2%, reaching US$ 193 billion in FY23. As per the National Association of Software and Service Companies (NASSCOM), the total amount of tech exports from India are estimated to amount US$ 200 billion for FY24.
Export Destinations
India exports services to many parts of the world. The USA, the UK, and Japan are the largest importers of Indian services. Due to the large-scale workforce availability, cheap labour, English language skills, India’s services are popular around the world. Hence, the software, computer, IT, BPO, and call centre are some of the largest services that are exported to America, Europe, Asia, and also the Gulf countries.
For the software services and the IT sector of India, the USA, Europe, and the UK are the top importers accounting for about 55%, 14%, and 17% of the total IT-ITeS exports, respectively. Some of the other major software services from India are in Canada, Asia, Australia, and New Zealand. During 2022-23, USA and Canada imported US$ 103.9 billion of software services from India. The share of Europe and Asia combined during the same period was about 37% (i.e., US$ 69 billion). Also, during the same period, the share of the same for Australia and New Zealand combined was 3% (i.e., US$ 4.8 billion). Some of India’s other top export markets are Hong Kong, Singapore, Germany, Bangladesh, Netherlands, and Nepal.
Government Initiatives
Software Technology Park (STP) Scheme
The STP scheme is provided for the promotion of software exports from India. Under this scheme provides several benefits such as a single-window clearance, 100% foreign equity, exemption from payment of duty of customs, refund on GST on capital goods procurement from DTA and import of second-hand capital goods.
Digital India Internship Scheme
The Digital India Internship Scheme was launched by the Ministry of Electronics and Information Technology (MeitY). The objective of this scheme is to provide a first-hand experience to students under the guidance of experienced and qualified mentors. The internship will cover cyber law, digital forensics, semiconductors and nano-electronics technology, digital literacy, digital payments and economy, information services management systems, etc.
PhD Scheme
The objective of this scheme is to increase the number of PhDs in the Electronics Systems and Design Manufacturing (ESDM) and IT-enabled services in India. The scheme was approved in 2014 with a financial outlay of Rs. 466 crore (US$ 59 million). In Phase 1 of the scheme (which was valid till March 2023), PhD seats were allocated to 97 institutions (IITs, NITs, Central, State Universities etc.) in 25 states and four Union Territories. Currently, Phase 2 of the scheme is ongoing with a budget of Rs. 481.93 crore (US$ 58 million) for nine years targeting- 1,000 Full-Time PhD Candidates, 150 Part-Time PhD Candidates, 50 awardees of “Young Faculty Research Fellowship”, and 225 awardees of Post-Doctoral Fellowship.
Government Bodies
Service Export Promotion Council (SEPC)
The Ministry of Commerce and Industry set up the SEPC. It is the apex body for the trade-related activities of services sectors. It acts as an advisory to the government of India in terms of regulations and policy and acts as a liaison between the industry and the government. It also works towards trade intelligence generation, export development of services industries, promotion and enabling business environment.
Ministry of Electronics and Information Technology (MeitY)
The MeitY is an apex agency of the Union Government of India. The ministry's objective is to provide e-infrastructure to the government, promote electronics hardware and the IT-ITeS industry, implement an R&D framework, and provide support to e-skills and knowledge networks. The functions of MeitY are promoting digital transactions and payments, promoting IT education, handling cyber law matters, undertaking development initiatives, etc.
SERVICES EXPORT PROMOTION COUNCIL
Head Office: DPT – 417, 4th Floor, Prime Towers,
Plot No. 79 & 80, Pocket – F,
Okhla Industrial Area Phase – I,
New Delhi-110020
India
Tel.:+91-11-43562656
Email: info@servicesepc.org
Website: http://servicesepc.org
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