An Sahai said that the trade agreements like the Comprehensive Economic Partnership Agreement recently signed between India and UAE will help. India already has such agreements with ASEAN nations including Singapore and Malaysia.
He, however, added there need to be more facilitation in services through the mutual recognition agreement degrees between countries as well as easier immigration rules to exploit the huge potential in Mode4 of services. 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 FY22is $400 billion while that for service exports is $240 billion.
The target for service exports in FY23 is $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 Covid19 pandemic but the fall was cushioned by increased digitisation and hybrid modes of working.
Services are exported under four modes: direct exports such as an IT executive servicing a client abroad; services, primarily hospitality, provided to foreign 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&ITES, there are several other sectors that are performing well and growing at a rapid pace. These include consultancy services, AVCG, travel and tourism, logistic services, other business and financial services led by fintech,” he added.
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