Lovely Professional University School Of Business And Applied Arts:

Presentation on:Growth Of India’s Global Service Trade

Presented by:Asma Khanam

Reg. no.11112503Date:29th Jan 2013

Table Of Contents

• Economic Status Of India• Growth of Service Sector• S&T and Resources in India• Growth in Biotechnology, IT and Telecom Sectors• Global Trade in Services• Conclusion• Recommendations• References

Economic Status Of India:

• India has increasingly integrated into the global economy. Indian Economy has witnessed dynamic growth in recent years and overall economic upsurge.

• From a growth rate of 5.52% in 1997-98 to 2001-02 it has accelerated to likely 7.68% in 10th plan period (2002-03 to 2006-07) and 7.94% in 11th plan period (2007-2012)

• Increased inflow of FDI, from $3.7 billion in 1997-2002 to $5.4 billion in 10th plan up to Dec, 2005 and $10.4billion by 2012.

• GDP by sector: Agriculture=17.2%

Industry=26.4%

Service= 56.4%• Economic growth for 2011-2012 fiscal year =6.5%

Growth of Service Sector The services sector accounts for 56.4% of GDP in 2011. Currently the fastest-growing sector of the economy, growing at 9% per annum

since mid 90s. In 2010, the share of services in the US$63 trillion world gross domestic product

(GDP) was nearly 68 per cent, as in 2001.Growth of Services Sector GDP (Constant Prices) SECTOR 2004-05 2005-06 2006-07(i) Trade, Hotel, Transport & Communication 10.6 11.5 13.0(ii) Financing, Insurance, Real Estate 9.2 9.7 10.6(iii) Community, Social & Personal Services 9.2 7.8 7.8(iv) Total Services 9.9 10.0 11.0(v) GDP at Factor Cost 7.5 8.4 9.4Source: central statistical organization

Share of different services categories in GDP at factor cost (current prices)

Source: Economic Survey of India

percent

Technology Intensive Exports of India

Source: Economic Survey of India

(Rs. million)

S&T and Resources in India

• India developed a strong science & technology base which provides technical and technological inputs for overall economic development.

• Has 273 Universities, 12300 colleges, IITs, IIMs and National Institute of Technologies to develop trained technical and management manpower.

• India has 200 major research & development institutions under government (CSIR, DRDO, ICAR & ICMR) & other private sector institutions.

• DSIR, Min of S&T, Govt. of India has the task of Technology Promotion, Development and its utilization.

• Measures in this direction - scheme “Promotion and Support to consultancy services” being implemented.

Government Departments engaged in R&D

Growth in Biotechnology Industry

Growth in IT & IT Enabled Services

• The year 2011-12 was marked by growing global uncertainties. Global recovery has stalled, growth prospects have dimmed and downside risks have escalated. By contrast, the Indian IT-BPO Industry (including hardware) continued to exhibit resilience.

• It weathered uncertainties in global business environment and reached a significant milestone in the year 2011-12 by aggregating revenue of US $ 101 billion, a growth of about 14.7 per cent over the previous year. Thus, the year 2011-12 is a landmark year for the IT-BPO Industry. 

• Direct employment within the IT-BPO sector reached 2.77 million, with over 2,30,000 jobs being added in 2011-12.

Contd……• The Indian software and services export including

BPO exports is estimated at US $ 68.7 billion in 2011-12, an increase of 16.4 per cent. The IT services exports is estimated to be US $ 39.8 billion, showing a growth of 18.8 per cent. BPO exports are estimated to grow to US $ 15.9 billion in 2011-12, a year-on-year growth of about 12 per cent. IT services contributed 58 per cent of total IT-BPO exports in 2011-12, followed by BPO at 23 per cent and Software products/engineering services at 19 per cent.

Contd…

• USA continues to drive IT-BPO exports growth. Growth is being driven by higher demand for IT services and support. Continental Europe and UK, the second largest markets for Indian IT-BPO exports are seeing their share decline in the last three years. Indian service providers have been aggressively growing business in the Asia-Pacific (APAC) market. Aimed at reducing their geographic dependency and spread currency risk, APAC is growing fastest at nearly 18 per cent; its share in total IT-BPO exports is expected to increase to nearly 8 per cent.

Growth in Telecom Sector• India’s Telecommunication network 3rd largest in

the world and second largest among the emerging economies of Asia with more than 270 million connections.

Source: Press information Bureau Government of India

Global Trade in Services• For year 2010-11, services exports from India was 132.9

billion dollars and services imports was 84 billion dollars. • Services exports from India grew by 38.4% in year 2010-11

and imports by 40% • For the year 2011-12 (apr-sept, i.e. half year), services exports

was USD 58 billion and imports was USD 36.6 billion. • The percentage shares of top five heads for India are: Software

45.2%, Business services 15.9%, Travel 12.9%, Transportation 12.8% and financial service 4.2%. 

• In respect of trade in commercial services India is placed in the 12th position among global exporters of commercial services

• India exported 87 billion dollars worth of commercial services in 2009.

Contd…..

• The value of trade in USD Billion for 2010-11 for the above heads are: Software 55.6 billion, business 24.1 billion, travel 15. 3 billion, transportation 14.3 billion and financial services 6.5 billion dollars. 

• In imports, the top five heads for India are: business services (34.3%), transportation (20.7%), travel (19.1%), financial services (10.9%), insurance and communication (2% each). 

• A consistent increase in surplus on account of India's service exports has been a cushioning factor for financing a large part of the trade deficit on the merchandise account in recent years. 

• For the past five years, services trade surplus has financed around 41% of our merchandise trade deficit. 

Performance of services :International Comparison

Source: Economic Survey of India

Indian Consultancy Scenario

• Services sector in India growing rapidly.• Indian consultancy sector has over 10000 consultancy

organizations and individual consultants with a estimated annual turnover of Rs. 15 billion.

• 100,000 specialists employed, including nearly 10000 management consultants.

• Over 1000 R&D institutions supporting Indian consultancy sector.

Government Initiatives for Consultancy Services

• Export of Consultancy Services and International Co-operation

• International Cooperation in Technical Consultancy• Promotional Policies & Measures for Technical

Consultancy Services • Technical Consultancy Development Programme for

Asia and Pacific• Asian & Pacific Centre for Transfer of Technology

Conclusion

• Indian service sector is growing at a faster rate and has established 3rd position in the world in growth with a CAGR of 9.4% (2001-10).

• Government is spending more on R&D so that more innovations occur.

• Indian service sector growth is sustainable as after US crises it has started strengthening its trade roots in Asian continent where large market exists.

• US is the largest importer of Indian services.

Recommendations• There should be more agencies to institutionalize surveys on

emerging services accounts like health.• More expansion of coverage of cross boarder transactions in

services.• More expenditure should be on innovations.• Companies should co-ordinate with government so as to

increase the trade and find more trade destinations.• More IT and Telecom companies should be established

because there exists a large market for this due to the modernization and internet world.

• Banks, insurance companies and mutual funds must be convinced to shift their back-office work to India. The present conditions are ideal financial institutions are scramble to cut costs.

References• Indian Economy by Mishra and Puri• Economic Survey of India (2011-12) Chapter:10• Press information Bureau Government of India

(http://pib.nic.in/newsite/efeatures.aspx?relid=85555)• Central statistical organization• http://articles.economictimes.indiatimes.com/2012-02-09/news/31042127_1_growth-

forecast-nasscom-president-som-mittal-industry-body• Department of Biotechnology Ministry of Science & Technology Government of India

September, 2011• http://pib.nic.in/newsite/efeatures.aspx?relid=85555• http://www.indiainbusiness.nic.in/industry-infrastructure/industrial

sectors/Biotechnology1.htm• http://www.ceicdata.com/search_campaign.html?

ui_lang=EN&how_hear=110&spage=11578&gclid=CMbJqfyShrUCFYR66wod4w8Agw#page=page-1

• http://talkindiantrade.blogspot.in/2012/03/service-trade-of-india-economic-survey.html• http://planningcommission.nic.in/data/datatable/index.php?data=datatab• http://origin-www.livemint.com/Politics/pBdBYENQd9Aabq8GGgQ5JJ/Indias-FDI-

inflows-fall-42-in-first-half-of-2012-UN-agenc.html

THANK YOU