India’s services exports will likely continue to be buoyant and rise to $375-400 billion in the next financial year, thanks to strong demand from developed countries despite the headwinds to merchandise exports from global uncertainties, Services Export Promotion Council (SEPC) chairman Sunil H Talati told FE. These exports are set to cross $350 billion in the current fiscal, as against $325 billion initially targeted.
The value of services exports during April-February 2022-23 was $296.94 billion, up 30.5% on year, while imports were up 24.5% on year at $164 billion. Services trade surplus surged 38.6% on year to reach $132.95 billion during the period.
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“In March 2022, I had forecast service export of $325 billion in FY23. At that time, people were sceptical. Later, commerce minister estimated it to be $350 billion in FY23. Fortunately, by March 2023, we will cross $350 billion,” Talati told FE.
“The way things are opening up, particularly in accounting, auditing, legal and medical and education, SEPC target for service exports will be $375-400 billion next year.”
Supported by the gains from high services exports, the moderation in oil prices, and the recent fall in import-intensive consumption demand, India’s current account deficit (CAD) is estimated to fall in FY23 and FY24, providing a buffer to the rupee in uncertain times, the finance ministry said in its February report.
“All European countries and many other countries passing through a recessionary period, the war still going on in Ukraine and Western countries’ relations with China and Russia have deteriorated. That’s why the export of goods is affected and will continue to be affected. Whereas, in all these countries, services are very much in demand. Therefore, we are hopeful that we will do much better in the export of services,” Talati said.
SEPC expects good growth in medical, medical tourism, accounting, auditing, education and entertainment. Indian IT exports, from programming to execution, are doing fantastic.
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“World over there’s a tremendous shortage of accountants. In US and UK, fewer and fewer people are doing CA (Chartered Accountants) and CPA (Certified Public Accountants). Because of less appetite for work in those countries, the stakeholders are keen to send their work to India,” Talati said, adding that India is also facing competition for these services from the Philippines and South Africa.
Commerce minister Piyush Goyal is giving special attention to the services sector through SEPC to promote services exports in the global market, he said.
Export of goods contracted 8.82% to $33.88 billion and imports shrank 8.21% to $51.31 billion in February, precipitating a trade deficit of $17.43 billion, the lowest since January 2022, easing pressure on the current account.
Recently, commerce secretary Sunil Barthwal said that going by the trend, India’s goods and services exports will cross $750 billion in 2022-23, compared with $676 billion in 2021-22.