The share of India’s services exports in world services exports has risen remarkably from 0.5 per cent in 1993 to 4.3 per cent in 2022, according to the Economic Survey tabled in Parliament on Monday by Finance Minister Nirmala Sitharaman.

India’s external sector remained strong amidst ongoing geopolitical headwinds with services exports continuing to perform well. The overall trade deficit reduced from $121.6 billion in FY23 to $78.1 billion in FY24.

The survey says India is now the seventh-largest services-exporting country globally, rising phenomenally from its 24th position in 2001.

Amongst services exports, software/IT services and business services exports have increased. This was supported by India’s emerging as a hub for Global Capability Centres (GCCs). The country ranks 2nd in the world in telecommunication, computer, and information services exports, 6th in personal, cultural, and recreational services exports, and 8th in other business services exports.

The growth in Global Capability Centres (GCCs) is reflected in the services BoP, with ‘Other Business Services’ being the second-largest contributor in services exports in FY24 with a share of 26%. In 2012, about 760 GCCs were operating out of India, and as of March 2023, India houses over 1,600 GCCs.

India performed well in merchandise trade despite a lowering in global demand with exports crossing $776 billion and imports reaching $898 billion in FY23. With this, merchandise trade deficit narrowed to $238.3 billion in FY24 compared to $264.9 billion in the previous year.

There was a slowdown in India’s major exporting partners (especially the EU, whose real GDP grew barely by 0.6 per cent in 2023, compared to 3.6 per cent growth in 2024), along with the lagged impact of monetary tightening carried out by many countries to control rising inflation.

The survey notes that the adverse trade environment in 2023 is expected to ease somewhat this year and the next, boosting goods trade in 2024 and 2025. World merchandise trade volume is expected to grow at 2.6 per cent and 3.3 per cent in 2024 and 2025, respectively, as demand for traded goods rebounds.

India’s exports of engineering goods, electronic goods, and drugs & pharmaceuticals increased in FY24 on a YoY basis. India’s share in world electronics exports also improved. India maintained a strong foothold in the drugs and pharmaceuticals sector.