The optimism about meeting the targets comes at a time when advanced economies are witnessing a resurgence, spurring demand for both goods and services.
Commerce and industry minister Piyush Goyal on Tuesday said India will realise by 2030 a lofty services export target of $1 trillion, nearly five times of what it exported last fiscal.
For this to materialise, he said, the world’s seventh-largest services exporter needs to boost opportunities in high-growth segments beyond the dominant information technology and IT-enabled services (ITeS), and improve focus on promising areas like higher education, hospitality and medical tourism.
To support the services sector, the government has been actively pursuing market access opportunities via free-trade agreements with key economies (including the UK, the EU, Australia and the UAE) and is working on a programme that could replace the Service Exports from India Scheme in its current form, he added.
Sectors like tourism and hospitality, which were battered by the pandemic, are showing signs of revival, Goyal added. The commerce ministry has also set an ambitious merchandise export target of $1 trillion by FY28, against $291 billion last fiscal.
Surplus in services trade has long narrowed the often-huge deficit in India’s merchandise shipments. With renewed focus and targeted government intervention, services trade surplus could rise further from as much as $89 billion in FY21 and almost wipe out the deficit caused by merchandise exports, senior industry executives say. The services sector has also been the largest recipient of foreign direct investment, making up for 53% of the total inflows between 2000 and 2021.
The optimism about meeting the targets comes at a time when advanced economies are witnessing a resurgence, spurring demand for both goods and services.
At the same time, Goyal exhorted the services industry to shun the crutches of government subsidy, saying past experiences show absence of dole-outs encourages firms to raise competitiveness. Also, the subsidy amount can be utilised for those who need it more. He was speaking at the Global Services Conclave 2021, organised by the Services Export Promotion Council (SEPC) in New Delhi.
The government has announced that it will release `56,027 crore to clear all the pending dues owed to exporters of both goods and services until FY21 under various schemes. Of this, `10,002 crore is meant for services exporters. However, in January 2021, it replaced a WTO-incompatible incentive programme for merchandise exporters with a tax refund scheme for them.
Outgoing SEPC chairman Maneck Davar said services exports are targeted to rise to a record $240 billion this fiscal.
Stressing that India has transformed from being the ‘Back office’ of the world to its ‘Brain office’, Goyal said while IT and ITeS have long dominated services exports, it is time the country ramped us focus on other sectors. For instance, students from the developed nations, including the US and Canada, prefer India for heritage, art and culture studies.
The services sector is the biggest driver of India’s economic growth. It also provides employment to nearly 2.6 crore people and contributes approximately 40% to India’s overall exports.
