According to a report by Goldman Sachs, India has emerged as the “services factory” of the world with its services exports more than doubling in the past 18 years. The report predicts that India’s services exports are expected to reach $800 billion by 2030. In 2023, India’s services exports reached $340 billion, showing significant growth.
The report highlights the growth of India’s services exports compared to its goods exports. Between 2005 and 2023, services exports grew from 2% to 4.6%, while goods exports only grew from 1% to 1.8% in the same period. This indicates the increasing importance of the services sector in India’s economy.
While the report recognizes India’s success in services exports, it also warns against complacency. It raises concerns about resource stress faced by Bengaluru, a major hub for computer services exports, as well as the need for a skilled workforce to sustain the future growth of the sector.
According to the report, services exports are projected to comprise 11% of India’s GDP by 2030, amounting to $800 billion. This represents a significant increase from around $340 billion in 2023. However, the projected growth falls short of the government’s target of $1 trillion for services exports by 2030, as outlined in India’s foreign trade policy.
The report also highlights several challenges that could impact the growth of services exports. These include the lack of skilled workers and environmental stress in key services export hubs like Bengaluru. Training technology graduates to meet the demands of the job market is identified as a challenge, while the growth in the services sector is putting pressure on the natural resources of cities like Bengaluru, which is currently experiencing a water crisis.
Additionally, the report recognizes the dependence of services exports on global demand for information and communications technology (ICT) spending. It raises concerns about the potential negative impact of rising protectionism in destination countries on India’s export prospects.
In conclusion, while India has made significant strides in becoming a global services factory, there are challenges to overcome in terms of skilled workforce development, resource management, and external factors such as global demand and protectionist policies.