1. Aditi Chakravorty – 01 Aditi Puri – 02 AkshatAwasthi – 03 AlokDhodapkar– 04 Section B Trends in Indian Services Sector Exports1991 - Present

2. Introduction Globally, the largest and fastest growing sector Reason for Growth of the service sector: Increase in Urbanization & Privatization More demand for intermediate and final consumer services Vital for the well being of the economy.

3. Indian Services Sector Post Liberalization The Indian economy moved from agriculture based to a knowledge based economy Contribution of Services to GDP has risen from 41% in 1990s to 57.8% in FY2010

4. The entire decline in the share of agriculture sector in GDP, has been picked up by the service sector . Manufacturing sector’s share has remained more or less the same Service Sector Growth has been consistent during slowdown and constant since then

5. Country Comparison

6. Drivers of Growth Strong growth in Foreign Demand – especially IT & ITES

7. Deregulation & Liberalization of Foreign Investments

9. Other Factors Increase in Private Consumption of Services Increased Industrial Service Outsourcing: industries now prefer outsourcing services previously produced in house

10. SECTORAL COMPOSITION OF SERVICE EXPORTS

11. Sector-wise Break Up Contribution to GDP: Trade, Hotels, Transport and Communication: 21.1% Finance, Insurance, Real Estate, Business Services: 18.4% Community, Social and Personal Services: 13.9% FY 2010

12. Information Technology Services India ranks first before industrialised countries like Ireland, UK, US and Germany India is attractive because of its low cost of operations, high quality of products and services and availability of skilled manpower. rbi.org.in

13. India’s share of export of computer and information services in the total service exports is high compared to other countries

14. The IT sector has seen an enormous growth in the last decade. Growth slowed down during the US subprime crisis but exports saw a rise nonetheless.

15. Finance and Insurance The Insurance and financial services was 5.47% of commercial service exports in 2008, according to the World Bank. The opening of the life and non-life insurance sectors to foreign investment in 2000 spurred considerable activity by foreign investors

16. Travel and Tourism The most favoured Asian destination, India posted a 24% increase in foreign tourist arrivals in 2010 as compared to 2009. The number of foreign tourist visits during 2010 was 17.9 million compared to 14.4 million in the previous year, registering a growth of 24.2% Source: TNN

18. Contribution to Forex Reserves The Indian tourism industry is expected emerge as a second largest employer by 2019 Capital investment in the tourism sector is expected to increase by 8.8% from 2010 to 2019. The foreign tourist arrivals (FTAs) in India during the year 2008 were 5.37 million registering a growth of 5.6% over previous year. The foreign exchange earnings (FEE) from tourism during 2008 were estimated at 11.75 billion USD as compared to 10.73 billion during 2007, registering a growth of 9.5%.

19. Issues with Tourism The Mumbai terror strike and global recession has affected tourist arrivals to India India needs to improve tourism infrastructure and services to catch up with other Asian tourism favourites.

20. Legal Services India’s prominence in the legal process offshoring (LPO) segment is being widely acknowledged in the global market. Off-shoring legal work to India saves about 80 per cent of the cost that may be incurred in a developed country like USA.

21. Features of Indian Legal Services The cost of employing a fresh law graduate in the USA would be US $ 150,000 per annum as compared to US $ 15,000 per annum in India. Establishment cost to set up a legal firm in India is also low as compared to the USA or Europe. According to estimates, India is 40 times more cost effective than in the USA in this regard.

23. Barriers to trade in Services Services trade often requires (temporary) movement of the provider or the consumer Restrictions on services mostly arises from regulations and discriminating requirementsregarding this movement

24. Types of Barriers to Trade A. Prohibitions to trade: Foreign access to service markets is completely forbidden e.g., in case of transportation of goods within a country and basic telecommunication service providers

25. B. Restrictions to trade : (a) Quantity -based barriers (to service providers) (b) Price-based barriers ( tariffs ) (c) Barriers that impose physical or corporate presence in a domestic market (d) Licensing, Standards and Procedures of government procurement (e) Regulations regarding marketing and distribution

26. The Flipside

27. The Flipside Income grows faster than employment Service-led growth can have serious implications for inflation, income distribution and balance of payments Dependence on foreign Economies US and Europe have proven to be unstable in the past

28. Future Outlook and Challenges To fully exploit India’s service sector growth potential, carefully differentiated strategies need to be formulated: Maintaining balanced growth across all segments in the sector Retain India’s competitiveness in those sectors where it has already made a mark such as IT & ITeSand Telecommunications

29. Future Outlook and Challenges Making forays into globally traded services such as financial services, health care, education Making inroads into some traditional areas such as tourism and shipping

30. THANK YOU