Services Exports Likely to Hit $1T by 2027

 An expected rebound in inbound tourism and growing demand for India’s services in other sectors such as medicine, law and even gaming may help the country achieve its service exports touch $1 trillion in 2027, three years ahead of estimate, said a senior official at a trade promotion body. Experts however said the target is ambitious and would require boosts, enhanced trade agreements and incentives from the government across various services sectors. “We had a meeting with the commerce minister (Piyush Goyal) a few days back. At that meeting it was discussed that the way things are going, we may achieve this target by 2027,” said Karan Rathore, vice chairman of Services Export Promotion Council. The current target is 2030. Service exports contribute to 40% of total exports but have been growing at a faster clip than merchandise exports. India’s target for merchandise exports for FY22 is $400 billion while that for service exports is $240 billion. The target for service exports in FY23 in $325 billion. Merchandise exports are expected to reach the $1 trillion target in FY27, said Ajay Sahai, director general, Federation of Indian Export Organisations. Service exports contracted during the Covid-19 pandemic, but the fall was cushioned by increased digitisation and hybrid models of working. 

Services are exported under four modes: direct exports such as an IT executive servicing a client abroad; services, primarily hospitality, provided to foreigner tourists coming into India; an Indian educational, medical or financial organisation opening up outlets abroad; individuals travelling abroad to provide services, which is different from salaried jobs. “IT and ITES remain one of the top service exports from the country. Nearly 50% of the total services exports comprises IT exports. According to the RBI, software services exports went up by 2. 1% to $148. 3 billion in 2020-21. Exports include services of foreign units affiliated with Indian companies. IT exports dominate the industry and constitute the majority of the total revenue,” said Rathore. “However, apart from IT and ITES, there are several other sectors which are performing well and growing at a rapid pace. These include consultancy services, AVCG (audio visual and gaming), travel and tourism, logistic services, other business and financial services led by fintech,” he added. Rathore said a push on tourism will also help. For example, the Rajasthan state government’s investment on tourism quadrupled to ₹1,000 crore for FY22 compared to ₹400 crore. The one significant incentive to service exports is Service Exports from India Scheme, through which the government aims to promote export of services from India by providing duty scrip credit for eligible exports. But there need to be more, said Rathore.