India is set for a major change in its export trends, with outbound shipments of the services sectors expected to overtake merchandise exports by 2030 and touch USD 618 billion, think tank GTRI said on Wednesday.
Between 2018-19 and 2023-24, the country'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.
"At this rate, by FY2030, services exports are expected to reach USD 618.21 billion, edging past merchandise exports, which are projected at USD 613.04 billion," the Global Trade Research Initiative (GTRI) said.
It added that most growth in India's services sector comes from two categories -- software & IT services, and Other Business Services (OBS). Together they accounted for 86.4 per cent of total exports in the last fiscal year.
GTRI Founder Ajay Srivastava said OBS, encompassing areas such as legal, accounting, tax consultancy, management consulting, and market research, generated USD 102.8 billion in 2023-24, representing 33.2 per cent of the total services exports.
These industries leverage the country's highly skilled workforce and its burgeoning IT infrastructure, solidifying the nation's reputation as a global services powerhouse, it said.
Software and IT services, grouped under the broader category of 'telecommunications, computer, and information services' contributed USD 190.7 billion to India's exports in 2023-24.
This segment represents 56.2 per cent of the total services exports, with about 80 per cent of these delivered digitally.
"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," Srivastava said.
"While software and IT services remain the largest segment, OBS is poised to outpace them in growth, driven by rising global demand for specialised services and the integration of services into manufacturing," he added.
Globally, OBS trade is more than twice the size of the IT sector, underscoring its potential. In 2023, global OBS trade stood at USD 1.8 trillion, accounting for 25.4 per cent of world services exports, compared to USD 762 billion (10.7 per cent) for software and IT.
The GTRI suggested 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. Automation and artificial intelligence further threaten 40 per cent of IT jobs," he said, adding that diversification into new markets and focusing on high-value services like digital transformation and AI integration can help reduce dependency on the US and expand earnings.
It also asked to promote OBS exports as despite its potential, this segment remains underutilised by many Indian firms.
Raising awareness about global opportunities in OBS among engineering, research, and management professionals can unlock significant growth.
"India should actively target services with high global trade volumes but low domestic participation. Categories such as transport, travel, maintenance and repair, insurance, and financial services offer immense growth potential," it added.
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