Services to Overtake Goods in Exports This Year and Touch $1 Trillion by 2030
A key strength of the sector is its consistent trade surplus, which has played a critical role in offsetting the country’s merchandise trade deficit. Services exports, growing at double-digit rates, have at times cushioned the deficit by as much as $155 billion.
Chennai: The services export will grow from $418 billion in FY26 to $500 billion in the current financial year to overtake merchandise exports and is well on its path of achieving $1 trillion by 2030.
The services industry has been growing on its own and has been cushioning the trade deficit of goods export. It expects the support of the government in the form of duty and taxes remission schemes to grab a larger share of the growing global services market.
“With the gap between merchandise and services exports narrowing to about $23 billion, services are likely to overtake goods exports by the end of this financial year, finds Abhay Sinha, Director General, Services Export Promotion Council. This marks a structural shift in India’s trade profile, where services are increasingly becoming the primary driver of export growth.
Without much support from the government, services exports are poised to grow from $418 billion in FY26 to $500 billion in this financial year and eventually to $1 trillion by 2030.
“Unlike manufacturing, services receive limited policy support despite comparable export value. Schemes like PLI and RoDTEP are not extended to services. The industry has proposed a duty remission scheme - DRESS (Duty Remission on Export of Services- similar) to RODTeP to support future growth,” he added.
India’s services exports are witnessing sustained momentum, driven largely by the strength of IT and business services. Sectors such as tourism and medical travel, which were hit hard during COVID-19, have gradually rebounded, contributing to overall growth. IT services continue to dominate, accounting for around 40–42% of total exports, while business services contribute another 22–25%. Together, these segments form nearly two-thirds of India’s services exports basket. Emerging areas such as engineering and research and development services are also gaining traction.
A key strength of the sector is its consistent trade surplus, which has played a critical role in offsetting the country’s merchandise trade deficit. Services exports, growing at double-digit rates, have at times cushioned the deficit by as much as $155 billion.
The business and professional services segment itself is diverse and expanding rapidly. It includes bookkeeping, accounting, legal and legal process outsourcing (LPO), architecture, consulting, market research, and construction-related services. These are predominantly skill-intensive services delivered by professionals, reflecting India’s strong human capital advantage.
However, India’s services exports remain heavily concentrated in developed markets such as the US and the European Union. While there is growing engagement with regions like Africa and CIS countries—particularly in education and medical tourism—high-value tourism inflows and deeper trade ties with regions like Latin America remain limited. Market diversification continues to be a major challenge.
Structural issues also persist across the four modes of services trade—cross-border digital delivery, consumption abroad, commercial presence, and movement of professionals. Regulatory hurdles, particularly in Mode 4 involving workforce mobility, remain a significant barrier. Visa restrictions, compliance requirements, and qualification recognition issues often limit the ability of Indian professionals to access global markets.
Trade agreements are expected to play a key role in addressing some of these constraints. Ongoing and upcoming free trade agreements with regions such as the EU, UK, UAE, and others could open new avenues for services exports. However, industry stakeholders point to gaps such as lack of reliable bilateral data, high compliance costs, and stringent qualification requirements abroad as areas that need greater attention in negotiations.
At the same time, emerging technologies such as artificial intelligence are reshaping the services landscape. While AI poses disruption risks in certain segments, it is also enhancing service delivery, enabling better market intelligence, and expanding digital transaction capabilities. This is expected to create new opportunities across sectors including healthcare, fintech, agri-services, space, defence, and software-as-a-service (SaaS).
