New Delhi [India], April 23 : India's services exports, in US dollar terms, grew at a robust compound annual growth rate (CAGR) of more than 14 per cent over the last 30 years (between 1993 and 2022), significantly higher than India's merchandise export growth (10.7 per cent) as well as world services export growth (6.8 per cent), as per an article in the Reserve Bank of India's (RBI) monthly bulletin.
As a result, the share of India's services exports in world services exports rose more than eight times from 0.5 per cent in 1993 to 4.3 per cent in 2022.
As per the article in the central bank's April bulletin, India today is the 7th largest services exporting country in the world, which is a phenomenal rise from the 24th position in 2001. India ranks 2nd in the world in case of telecommunication, computer and information services exports, 6th in personal, cultural, and recreational services exports, 8th in other business services exports, 10th in transport services exports, and 14th in travel services exports.
Robust growth and stability in services exports have imparted strength to India's balance of payments (BoP) by offsetting a significant part of the economy's merchandise trade deficit.
With the advent of digitalization and technological advancements, emerging market economies (EMEs), including India, have witnessed newer opportunities to expand exports of services and to improve their participation and competitiveness in global value chains (GVCs).
"Services inputs, whether imported or locally produced by foreign or domestically owned enterprises, are increasingly used in the production of manufactured products that are subsequently exported, thus leading to a growing servicification of manufacturing exports," the article read.
While global merchandise exports dipped by 7.2 per cent in 2020, the decline in services exports was much sharper at 17.2 per cent.
In contrast, in the case of India, services exports stood resilient, primarily owing to the larger share of telecommunication, computer, and information services exports, which gained from digitalization and the government's Digital India initiative providing the infrastructure needed for the growth of services exports, especially information technology (IT) and IT-enabled services (ITeS).
"India's rising software and other business services exports through Global Capability Centres (GCCs) are a testament to its growing dominance in high-skilled and high-value services exports. The wave of big data, Artificial Intelligence (AI), Machine Learning (ML), Internet of Things (IoT), and advancements in compatible hardware, generative AI, and spatial computing has opened up newer dimensions for Indian software exports," the article read.