Informist, Monday, Apr 29, 2024

MUMBAI – Goldman Sachs sees India's services exports around 11% of GDP by 2030, up from the current share of 9.7% of GDP, having risen at a compound annual growth rate of 11% and twice as fast as the global growth between 2005 and 2023. The global investment banking company sees the services exports at $340 bln by the end of 2030, it said in a research report. Last year, the country's services exports were $338 bln, rising more than six times from $53 bln in 2005.

The strength in India's services sector, and its potential can be witnessed from the fact that the country's share in global services exports rose to 4.6% last year from less than 2.0% in 2005. Within services, computer services sector maintains its dominance, accounting for nearly half of India's services exports in 2023, the report said.

However, professional consulting exports have grown the fastest, at a 17% compound annual growth rate from 2005-2023, to contribute more than 18% of India's services exports. "This has mainly been driven by the rise of global capability centres in India, where revenues have grown four times over 13 years to $46bn in 2022-23, employing 1.7 mln people," Goldman Sachs said.

In recent times, services exports have provided a cushion to India's external balance from supply-side shocks, the report said. As exports from the services sector rise, the rupee will also see some stability.

Globally, services trade has become important over the last two decades as tradable activities have broadened from manufacturing into services. "We estimate global services exports to have grown to $7.3 trln in 2023 at a compounded annual growth rate of 5.5%, from $2.8 trln in 2005, faster than global goods exports which grew at a compounded annual growth rate of 4.9%," the report said. As a percentage of world GDP, services exports grew to 7.0% in 2023 from 5.8% in 2005, it said.

With the setting up of Gujarat International Finance Tec-City as an international financial services centre, there is scope for India to increase its market share in the insurance and financial services sector, the report said. The expansion in the nation's services exports outpaced the growth in its goods exports, which increased to 1.8% last year from 1.0% of world merchandise exports in 2005, it said.

On the back of sustained strong services exports, the country's current account deficit is expected to remain around 1.1% for the next six years, the report said. This is because of a higher services trade surplus of about 4.9% of GDP being offset by a goods trade deficit, net primary and secondary inflows, of 5.9% of GDP.

Despite resilient information technology services growth, and the opportunity from global capability centres in coming years, it is prudent not to take services export growth for granted, the report said. "In terms of domestic constraints, having job-ready technology graduates has been cited as a challenge in some cases," the report said. End

Reported by Sourabh Kumar

Edited by Ashish Shirke

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