India’s services exports will overtake merchandise exports for the first time in November 2024, according to commerce ministry trade statistics. After sustained growth starting from February 2024, services exports stood at $37.6 billion and merchandise exports at $32.1 billion in November 2024.
India is known to export more services than it buys from other countries, but the value of trade exports remains a few billion higher than services exports, reflecting the country’s strength. However, since August, the gap between trade and services has started to decrease.
In November, growth in commodity exports contracted mainly due to sharp declines in exports of iron ore (-70 percent), oilseeds (-51 percent), petroleum products (-50 percent), gems and jewelry (-). 26 percent), mica and other minerals (-10 percent).
However, four of the top six contributors to exports – engineering goods, petroleum products, gems and jewellery, electronic goods, drugs and pharmaceuticals, and organic and inorganic chemicals – showed positive growth, indicating the country’s continued industrial growth.
As most of the sectors that saw contraction represent primary sectors, this indicates a tightening in the global market. The government should be aware of the potential impact on manufacturing as a secondary sector in the coming months.
For many years, the government has been eager to push the Make in India program by subsidizing manufacturing sectors, but it has not been able to significantly increase the country’s manufacturing capacity.
Therefore, the government should think of helping to take the country’s power, i.e. service, to the next level. When one looks at the top five export services, software services outperform the other four sectors, namely, business services, travel, transportation and financial services in overall value.
The financial services sector has immense untapped potential, which the government should encourage by introducing necessary reforms in education to allow Indian commerce and business graduates to recreate the magic that IT professionals have created for the country.