 "services trade, service industry, employee")
Recent headwinds for India’s booming services trade do not take away the segment’s longer-term growth potential.
There has been a slowdown due to global headwinds, but overall services trade surplus on a rolling 12-month basis is still moving up (chart 1).
The larger challenge has been the absence of similar momentum in merchandise exports. Indeed, the gap between merchandise exports and services exports has been narrowing, prompting some predictions of the latter overtaking the former in a few years (chart 2).
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The post-pandemic surge has seen India rise to seventh position globally in the export of commercial services in 2022, according to the World Trade Organization’s recently released “World Trade Statistical Review 2023” report. It was ranked 10th in 2019. The country accounted for a 4.4 per cent share in the world export of commercial services in 2022. The United States was at the top with a 12.8 per cent share. China had a 6 per cent share and ranked third (chart 3).
Compared to the top 10 leading commercial services nations by exports, growth in India’s exports was better than others between 2012 and 2022. Ireland recorded around a 242 per cent jump in exports. India was second among the large exporters (112.8 per cent), followed by China (110.5 per cent) and Germany (64.2 per cent). The US grew around 36 per cent (chart 4).
An analysis of global numbers suggests that other commercial services dominate services trade globally (chart 5).
This includes computer services, in which India has a sizeable hold. India has the largest share outside the European Union. Both the US and UK lag behind, as do Japan and South Korea.
This includes computer services, in which India has a sizeable hold. India has the largest share outside the European Union. Both the US and UK lag behind, as do Japan and South Korea.
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This also gives hope from the perspective of future growth. India’s share of other commercial services exports has risen since 2010, but remains relatively low. This is more so in the case of other services segments like travel and transport (chart 6).
