India's services sector contributed about 61 per cent to India's Gross Domestic Product, growing strongly at approximately 10 per cent per annum in 2015-16, a report launched on Wednesday at the second Global Exhibition on Services.
The report, published by industry body Confederation of Indian Industry (CII) and KPMG says India is currently the second fastest growing services economy in the world. With the 2015-16 financial year witnessing dismal merchandise trade, the government is betting big on services trade. Incidentally, India's share in global services exports was 3.2 per cent in 2014-15, double that of its merchandise exports in global merchandise exports at 1.7 per cent.
The government has called for a renewed focus on the services sector which contributes 53 per cent of the country's Gross Domestic Product, 51 per cent of foreign direct investment and 28 per cent of employment. The government had earlier stated that almost 50 per cent of its current account deficit was met from exports in services.
The report states that India's share in global services exports was 3.2 per cent in 2014-15, double that of its merchandise exports in global merchandise exports at 1.7 per cent, placing India in the eighth place currently amongst the top ten exporters of service in the world.
Information technology, in which the country is a global leader, accounted for $ 108 billion worth of services exports in the last financial year, exporting primarily to the United States, United Kingdom and Europe.
The sector is also the largest private sector employer in India, employing more than 3.7 million people. It added the industry is projected to grow at 8.5 per cent in FY2016, from $132 billion in FY2015 to $143 billion. This excluded e-commerce.
The report also pointed to the large growth in the tourism sector's, whose contribution to GDP was $125.2 billion in 2014, and is expected to reach $ 259 billion in 2025 (accounting for 7.6 per cent of India's GDP). In 2015, India is estimated to have received $ 109.6 billion in revenue from domestic and foreign tourists. India invited around 7.8 million foreign visitors in 2015. Government initiatives, such as e-visas and expansion of visa-on-arrival facilities are expected to fuel further foreign tourist arrivals.
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Other sectors like healthcare and logistics have also shown great promise, the report showed. The healthcare sector, attracting medical tourism from western nations and parts of south east asia is expected to reach $160 billion in 2017, accounting for about 4.2 per cent of GDP, and is poised to grow to $280 billion by 2020. On the other hand, the logistics market, currently valued at $123 billion, is poised to reach $160 billion by 2018, growing at a CAGR of about 9 per cent.
Speaking at GES, President Pranab Mukherjee underlined the need for a comprehensive policy framework to fully tap services potential.
"It is important to design and implement a services-driven development strategy within a coherent and comprehensive policy framework to ensure linkages with key policy areas and overall national objectives," he said.