India’s services trade has been a major driver of its exports over the past two decades. The country has emerged among the fastest growing nations in global services trade.
This sector has not only attracted significant foreign investment flows but also contributed significantly to exports as well as provided large-scale employment.
India’s services sector covers a wide variety of activities such as trade, hotels and restaurants, transport, storage and communication, financing, insurance, real estate, business services, community, social and personal services, and services associated with construction.
The services sector is the key driver of India’s economic growth. It contributed 54.17% of India’s gross value added (GVA) at current prices in 2018-19.
India’s trade in services (2014-18)
Source: ITC Trade Map, value in US$ billion
India’s export of services has shown an increasing trend from 2014-18, except for a small dip in 2015 whereas imports have also shown an increase from US$ 128.36 billion in 2014 to US$ 176.58 billion in 2018 with a trade surplus in the above period. The trade surplus has shown fluctuations in the past five years.
India’s services exports are majorly destined to USA, UK and Japan.
India’s services exports have increased from US$ 157.20 billion in 2014 to US$ 205.11 billion in 2018, with the growth in commercial services from US$ 156.61 billion in 2014 to US$ 204.48 billion in 2018.
The other business services segment has shown a remarkable increase from US$ 48.46 billion in 2014 to US$ 64.93 billion in 2018 followed by another major category of telecommunications, computer and information services from US$ 54.53 billion in 2014 to US$ 58.25 billion in 2018.
The travel services has also shown an increase, while transport services have hovered around US$ 18.5-19 billion in 2014 and 2018. All the other services have shown an increase except financial service which has shown a slight decline.
India’s exports of services (2014-18)
Source: ITC Trade Map; values in US$ billion
India’s imports of services have increased from US$ 128.36 billion in 2014 to US$ 176.58 billion in 2018. Commercial services rose from US$ 127.40 billion in 2014 to US$ 175.45 billion in 2018.
Travel services imports have also increased from US$ 14.59 billion in 2014 to US$ 21.31 billion in 2018. In addition to this, services not allocated have also shown an increase in imports from India.
Transport and other business services has also increased while financial services has shown a slight decline.
India’s imports of services (2014-18)
Source: ITC Trade Map; values are in US$ billion
India has maintained trade surplus in all the major services with the exception of the services not allocated segment, which witnessed a trade deficit from 2014 to 2017 before recording a trade surplus in 2018 at US$ 2.60 billion.
Government goods and services n.i.e., personal, cultural, and recreational services, maintenance and repair services n.i.e., insurance and pension services, charges for the use of intellectual property n.i.e. and transport are few of the services that have been in trade deficit during 2014-2018.
India’s trade balance of services (2014-18)
Hence, India is one of the fastest growing economies in trade of services in the world with major contributing sectors being telecommunications, computer, and information services, commercial services and travel.
Stay ahead in the dynamic world of trade and commerce with India Business & Trade's weekly newsletter.