India’s services industry is vast and the country has significant global standing in terms of services produced and exported. The sector contributes over 50% to GDP; from April 2021 to January 2022, services accounted for 53% of the Gross Value Added (GVA) and this is expected to increase by 8.2%. At the state level, the service sector accounts for more than 50% of the Gross State Value Added (GSVA) of 12 states in the country.
India is a leading service exporting country. In 2020, it ranked second among developing countries and had a share of 14%. This was an improvement from 2018 statistics when the country ranked third and had an 11% share. The country’s IT sector is well-known in the world and derives most of its revenue from foreign markets. India has distinct competitive advantages when it comes to service exports. These include lower workforce costs, knowledge-based services and English-speaking proficiency, which help Indians easily communicate with the rest of the world. Sectors such as management and professional consulting services, telecommunications, freight transport services, and services related to audio and visual media are driving service export growth in India.
Currently, India has a target of reaching US$ 1 trillion in services exports by 2030. However, in a recent meeting between Mr Piyush Goyal, Commerce Minister, and the Services Export Promotion Council (SEPC), it was discussed that this target may be achieved three years earlier, that is, by 2027. This is possible due to the strong recovery in travel and tourism and other sectors hit by the pandemic as well as robust demand seen for services in sectors of law, gaming and healthcare.
Despite the adverse effect of Covid-19 on the overall economy, over 2021–22, India achieved the highest-ever merchandise and services exports of US$ 669.65 billion. At US$ 250 billion, the share of the service sector in total exports was 37% in FY22. The sector witnessed an increase of 21% and 17% during 2020–21 and 2019–20, respectively.