The silver lining in India’s trade performance is services exports that expanded year-on-year (y-o-y) by 6.2% to $103.4 billion in the April-June quarter of FY27. Services exports are expected to further grow y-o-y by 11.6% to $470 billion during FY27 as a whole to help meet the Ministry of Commerce and Industry’s overall exports target of $1 trillion.
Services exports are a key driver of growth and an important constituent of India’s external accounts. Their share in the nation’s gross domestic product rose to 10.7% in FY26 from 9.7% in FY23-FY25 and 7.4% in the pre-pandemic period, FY16-FY20.
Due to rising surpluses in services trade, India’s deficit in goods and services transactions is much smaller than it otherwise would have been. This makes for a lower and more manageable imbalance in the current account.
While this is the good news, the ground for concern is the heightened policy uncertainty and growing competition in global services markets. Last fiscal, the growth in India’s services exports moderated to 8.7% from a rapid clip of 14% in FY23-FY25 and 7.6% in the pre-pandemic period.
Notwithstanding this moderation, the Economic Survey 2025-26 argues that the underlying momentum has been maintained as the current pace of expansion remains above pre-pandemic levels. This momentum reflects the fact that India is increasingly becoming a knowledge-based economy as software services have consistently comprised half of its services exports.
A gradual increase in the share of business services — which include research and development (R&D), professional, and management consultancy — has been observed. They accounted for 29.4% of services exports in FY26, up from 19% in FY14.
These positive shifts in services exports reflect the growing number of global capability centres (GCCs), which are a successful part of India’s growth story. GCCs are facilities set up by global giants to house critical functions such as R&D, information technology (IT), information technology-enabled services (ITeS), and business process management in locations away from their headquarters to support their operations.
With 2,100 centres located here employing 2.3 million professionals, India accounts for half of GCCs worldwide outside of their home country. This factor is an important element of the boom in India’s services exports.
GCC exports — or more generally, exports of multinational corporations providing IT, ITeS, and engineering R&D services from India — are pegged at $164 billion in FY26, according to consultancy firm Wizmatic. These numbers must be seen against India’s services exports of $421 billion in FY26.
Sustaining the momentum in services exports must be an overriding policy priority. In an adverse global environment, this depends on further diversification within services and moving up the value chain. The policy environment must facilitate more GCCs coming to India as they provide opportunities for diversifying beyond the traditional software exports to finance and emerging technologies like artificial intelligence (AI).
Finance Minister Nirmala Sitharaman has indicated that this was a vast untapped opportunity as two-thirds of the Fortune Global 2000 companies are yet to establish their presence in the country. GCCs must be encouraged to look beyond Bangalore, Hyderabad, and Pune to smaller towns, cities, and other states.
Around 10 states have either announced or are developing dedicated GCC policies. Despite these positives, Chief Economic Advisor V Anantha Nageswaran warned against complacency as India’s current advantage could erode as competing countries replicate its GCC model.
