India: Services Exports to Surpass Merchandise Shipments by 2030

Chennai: With a growth rate double that of merchandise exports, services export is set to surpass the former in five years. Services export is estimated to bring home $618 billion by 2030.

Between FY2019 and FY2024, India’s merchandise exports grew at a compound annual growth rate (CAGR) of 5.8 per cent, while services exports surged ahead at a robust CAGR of 10.5 per cent. According to GTRI, at this rate, services exports are expected to reach $618.21 billion, edging past merchandise exports, which are projected to be at $613.04 billion. In FY24, merchandise exports at $437 billion was $100 billion higher than $339.6 billion of services exports.

Services sector exports are dominated by two categories—Software and IT services and Other Business Services (OBS), accounting for 86.4 per cent of total exports in FY2024.

Software and IT services contributed $190.7 billion in FY2024, representing 56.2 per cent of the total services exports. Emerging technologies like generative AI, machine learning, and the Internet of Things are expanding opportunities for Indian firms, driving innovation and global demand for Indian expertise.

OBS, encompassing areas such as legal, accounting, tax consultancy, management consulting, and market research, generated $102.8 billion in FY2024, representing 33.2 per cent of total services exports. OBS is poised to outpace software services exports driven by rising global demand for specialized services and the integration of services into manufacturing. Globally, OBS trade is more than twice the size of the IT sector at $1.8 trillion in 2023 against $762 billion valued software and IT services.

According to Ajay Srivastava, founder, GTRI, diversifying IT exports beyond the US is a critical first step. The US accounts for 70 per cent of India’s IT export revenue, making the sector vulnerable to US policy shifts. “President elect Donald Trump’s criticism of outsourcing and restrictive H-1B visa policies underscore these risks,” he said.

In order to expand OBS services, India can make regulatory reviews to align domestic rules with global best practices, establish sector-specific associations to connect buyers and sellers, educate professionals about opportunities, upskill in niche areas, and strengthen infrastructure for seamless service delivery.

India should also actively target underserved services with high global trade volumes like transport, travel, maintenance and repair, insurance, and financial services.