India’s Reserve Bank (RBI) has reported that the country’s service exports have experienced an unprecedented surge of 26.6% in 2022-23, reaching US$ 322 billion. This has brought India’s services exports almost on par with merchandise exports. Let’s read this interesting milestone achieved by businesses in India..
India’s Diverse Services Exports Experience Strong Growth
India’s services exports cover a wide range of sectors, including IT, healthcare, and more.
Although the RBI does not release monthly data on services exports.
Its quarterly report on the balance of payment data provides a breakdown of services exports by category, such as transport, travel, construction, insurance and pensions, financial services, telecommunications, computer and information services, and personal, cultural, and recreational services, among others.
India’s software exports remain dominant in the services sector, but “other business services” have seen a significant rise, accounting for 24% of total services exports in the first nine months of FY23 (April-December), up from 19% in FY14.
Also read the official RBI Balance Payment Data at: Developments in India’s Balance of Payments during the Fourth Quarter
India’s Business Services Export Growth Fueled by Developing Global Capability Centers
India’s business services exports, which encompass legal services, online bookkeeping and accounting services, tax consultancy services, management consulting such as provided by VCFO Services, managerial and public relations services, advertising, market research, and public opinion polling services, are experiencing significant growth thanks to developing global capability centers (GCCs) in India.
Favourable Macro Factors and Need for Transparency in India’s Business Services Export Growth
Kotak Institutional Equities’ April report noted that India’s vast labour pool and wage differential with developed markets provided sufficient labour supply for the growth of business services exports from India.
Although top-down macro factors appear favourable, more transparency is required regarding the bottom-up composition of these exports, given the sharp rise in exports over the past few quarters.
India’s US$ 2 Trillion Export Target
The Indian government aims to achieve a combined goods and services export target of US$ 2 trillion by 2030.
According to the World Trade Organization’s 2021 data, India’s global commercial services exports account for 4% of total exports, while global commercial services imports account for 3.52%.
In comparison, India’s global merchandise trade exports and imports account for 1.77% and 2.54%, respectively.
Boosting Indian Exports through Registrations and Innovation
India’s economy has made significant progress in recent years, but it still has a long way to go in achieving desired levels of development. One effective way to promote economic growth and job creation is by boosting exports. Both large and small businesses can benefit from this strategy.
To begin, having GSTIN number through GST Registration is crucial. The GST registration provides businesses with the ability to claim input tax credit, making them more competitive in the market.
The Import-Export Code is another essential registration for businesses that engage in international trade. Obtaining an IE code simplifies the process of conducting global transactions and complying with regulations.
Small businesses can benefit from registering as an MSME (Micro, Small, and Medium Enterprises) as well. MSME registration provides various benefits such as subsidies, credit guarantees, and tax exemptions. These benefits can help small businesses to grow and expand their export capabilities.
Apart from necessary registrations, businesses can also focus on product quality and innovation to compete in the global market. They can explore new markets, take advantage of trade agreements, and leverage technology to enhance their export capabilities.
In conclusion, promoting exports is a crucial step in achieving India’s economic growth goals. Businesses can take steps to boost their export potential by obtaining necessary registrations, focusing on quality and innovation, and exploring new markets.
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Moreover, If you want any other guidance relating to GST, Export services, please feel free to talk to our business advisors at 8881-069-069.
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