India’s Services Exports to Surpass Merchandise Exports by 2030: GTRI Report

India's services exports are projected to outpace merchandise exports by 2030, marking a significant shift in the country’s trade dynamics, according to a new report by the Global Trade Research Initiative (GTRI). 

The report, titled India’s Services Export Revolution: Set to Outpace Merchandise by 2030, forecasts that services exports will reach $618.21 billion by FY30, slightly ahead of merchandise exports at $613.04 billion.

Between FY2019 and FY2024, services exports grew at a compound annual growth rate (CAGR) of 10.5%, nearly double the 5.8% CAGR for merchandise exports, the report noted.

The surge in services exports is largely driven by two key segments: Software and IT services, and Other Business Services (OBS), which together accounted for 86.4% of total services exports in FY24. 

Software and IT services, categorized under ‘telecommunications, computer, and information services,’ contributed $190.7 billion (56.2%) of India’s total services exports in FY24. The report attributes this growth to the global demand for India’s IT expertise, driven by innovations in artificial intelligence, the Internet of Things, and digital transformation, with around 80% of these services being delivered digitally.

Meanwhile, OBS, which includes legal, tax, consulting, and market research services, generated $102.8 billion in FY24, or 33.2% of total services exports. The report highlights that the global market for OBS is more than twice the size of IT services, and it is expected to outpace IT services in growth due to rising demand for specialized expertise and its integration with manufacturing processes.

Despite its strong performance in IT and OBS, India remains underrepresented in other global service sectors, such as transport, travel, financial services, and insurance, which together account for 64% of global services trade, the report added.

For FY24, India’s merchandise exports were valued at $437.06 billion, down from $451.07 billion in the previous fiscal year. Goods imports also declined to $677.24 billion from $715.97 billion. On the other hand, India's services exports rose to $339.62 billion in FY24, up from $325.33 billion in FY23, while services imports fell to $177.56 billion from $182.05 billion.

As a result, the overall trade deficit, encompassing both merchandise and services, narrowed to $78.12 billion in FY24, compared to $121.62 billion in FY23.