The contribution of services sector is not only a prominent factor in the growth of India’s Gross Domestic Product (GDP), but has also attracted significant foreign investment, contributed significantly to exports as well as provided large-scale employment. The share of services sector to Gross Value Added (GVA) is expected to be at 53.7 per cent in 2016-17 (as per second advance estimates) while the share of manufacturing is expected to be at 16.6 per cent, according to the provisional data from the Central Statistics Office (CSO).
The services sector covers a wide variety of activities such as trade, hotel and restaurants, transport, storage and communication, financing, insurance, real estate, business services, community, social and personal services, and services associated with construction. In fact, services like IT/ITeS, logistics services (including courier services), retail (including e-commerce and transport services), financial services, utilities (telecommunications and professional services, engineering services, architectural services, accounting and legal services) are a critical component for growth of the manufacturing sector.
The services sector is also an important contributor to the Indian exports. India’s share in global services exports stood at 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 amongst the top ten exporters of service in the world.
In fact, the Government of India has taken several initiatives to boost services exports from India. The government follows a multi-pronged strategy of negotiating meaningful market access through multilateral and bilateral trade agreements, trade promotion through participation in international fairs/exhibitions and focussed strategies for specific markets and sectors. In addition, the government also provides some fiscal incentives through Services Exports from India Scheme (SEIS) for some identified sectors. The Hon’ble Minister of State (Independent Charge) for Commerce & Industry, Ms Nirmala Sitharaman recently emphasised on the need for efficient and fair flow of services to promote international trade in services while inaugurating the Workshop facilitating Trade in Services organised by The World Bank Group in partnership with the Department of Commerce.
The services sector is also one of the identified sectors selected for branding under the sectoral brand strategy. With a positive intent from the industry backed by the government support, the services industry is expected to clock strong growth numbers in the coming years, both in the domestic market and exports alike.
