Services' share in exports to rise significantly: Commerce Ministry

Share of India's services exports in world export of services, rise from 0.6% in 1990 to 1% in 2000 and to 3.3% in 2013

The government expects a significant increase in the share of the services sector in India's total goods and services exports in the next five years, the target for which has been set at $900 billion in the recently announced Foreign Trade Policy.

"We are hoping that (with) changes in the services architecture of incentives in the new policy, services should do better. We hope that their share will increase significantly," a top Commerce Ministry official said.

In 2013-14, India's services exports stood at $151.5 billion in 2013-14, while outbound shipments of goods aggregated at $314 billion.

"We have fixed $900 billion exports target for goods and services for the five year period. We have deliberately not distributed this between merchandise and services. Let both the sectors compete with each other," he said.

In the new Foreign Trade Policy (FTP), the government has announced Services Exports from India Scheme (SEIS). Under this, the government would provide duty scrips to exporters. The scrip is a kind of certificate which can be used for payment of duties or taxes including customs, services and excise.

The official's comment assumes significance as the share of India's services exports in the world export of services, which increased from 0.6 per cent in 1990 to 1 per cent in 2000 and further to 3.3 per cent in 2013, has been increasing faster than the share of India's merchandise exports.

Services sector has emerged as a prominent sector in India in terms of its contribution to national and state incomes, trade flows and FDI inflows.

The sector contributes around 58 per cent to the GDP of the country and 28 per cent to employment. Its contribution to total trade is 25 per cent, around 35 per cent to exports and 20 per cent to imports.

"The increasing surplus from services trade over the previous decade has helped to offset a major part of the merchandise trade deficit, thereby keeping a check on Current Account Deficit," the FTP document said.

It said that India has inherent competitiveness and export potential in many skill-based and labour-intensive services, including healthcare, education, professional, R&D, consultancy, printing and publishing and entertainment.

Further, the official said that better services will improve the competitiveness of the manufacturing sector.

To promote quality services, the FTP said the Department of Commerce is working on an ambitious reforms agenda for services.

"This is being pursued through an inter-ministerial mechanism. Specific services sectors have been identified for internal ereforms aimed at enhancing their competitiveness and quality," it added.