Trade Analytics
Services

Services Industry Analysis

Latest update: April, 2018

  • India’s services sector GVA grew at a CAGR of 6.93 per cent to US$ 1,266.1 billion in FY18E from US$ 846.8 billion in FY12.
  • In terms of overall GDP India ranks 5th in 2017 and in terms of services GVA India ranked 13th as of 2015.
  • Growth rate of financial, real estate and professional services is expected to reach 11.07 per cent in FY18. Trade, hotels, transport, communication and services related to broadcasting are expected to grow at 11.88 per cent in FY18.
Growth

Notes: E – Estimate, CAGR - Compound Annual Growth Rate, Exchange Rate used is average for the year
Source: Indiabudget, MOSPI (Second Advance Estimates of National Income 2017-18 and First Revised Estimates of National Income 2016-17)

  • The services sector is the key driver of India’s economic growth
  • The Nikkei India Services Purchasing Managers' Index (PMI) grew to 50.30 in March 2018 from 47.80 in February 2018.
Growth

Source: Nikkei

Last Updated: April, 2018

Services sector is the biggest one in India and contributes more than half of Gross Value Added (GVA). As of 2016-17, 28.6 per cent of the Indian population was employed in this sector. The sector is a major contributor to the country’s FDI Inflows. In 2016-17, share of services sector in total FDI inflows was 60.7 per cent. FDI inflows to the sector during April 2000-December 2017 stood at US$ 64.10 billion. Nikkei India Services Purchasing Managers’ Index (PMI) increased to 51.40 in April 2018 from 50.30 in March 2018. India’s services exports grew 17.03 per cent year-on-year to US$ 143.263 billion during April-December 2017.

Services exports comprise a major part of the total exports of India. Net services exports from India stood at US$ 67.5 billion in 2016-17. Net services exports during April-December 2017 reached US$ 57.60 billion. Also, India is the export hub for software services. It has a 55 per cent share in the US$ 178 billion global sourcing market.

Sub-sectors that are performing well in FY18 are:

  • Aviation – India’s air passenger traffic doubled to 117.18 million in 2017 from 59.87 million in 2011.
  • Tourism – Foreign Exchange Earnings from tourism rose 20.8 per cent year-on-year to US$ 27.7 billion in 2017.
  • Information technology-business process management (IT-BPM) – Software exports are expected to grow 7-8 per cent and the domestic market is expected to expand by 10-11 per cent*.

The Government introduced ‘Services Exports from India Scheme’ (SIES) aimed at promoting export of services from India by providing duty scrip credit for eligible exports. Under this scheme, a reward of 3 to 5 per cent of net foreign exchange earned is given for Mode 1 and Mode 2 services. In the mid-term review of Foreign Trade Policy 2015-20, SEIS incentives to notified services were increased by 2 per cent.

Note: * According to NASSCOM

Sectoral Presentation (April, 2018)

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Previous Sectoral Presentation (March, 2018)

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