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A Paper on Institutional support in promoting exports from India: A case study on Services Export Promotion council

The share of services in India’s GDP has increased from 37. This is evident from the following facts and figures.9% totaling to 61. up from 46. Receipts from trade-related services dipped sharply by 56% and 27% respectively in the first and second quarters of 2009. while the general growth of the economy has moved up to 9. If Construction is considered as services as done by RBI. the sure bet for higher growth of the Indian economy lies in further accelerating the growth of the services sector. the growth rate of services in 2004-05. GDP Growth In India.(I) Services Sector Export – Contribution in India’s Growth Indian Service Sector – Overview Services sector has become important for many economies in the world and very important particularly for India.2% of GDP in 2009-10. Services export constitutes 36.9% in 2006-07.6 billion to over $102 billion (2008-2009). reflecting the income from India’s labour services abroad. with the value of commercial services exports from rising from $17. . it is important to accelerate the growth of industrial sector particularly manufacturing sector to catch up with the growth of services sector and maintain a decent and stable growth of agricultural sector. indicates that for a country like India where transfers due to labour services are becoming increasingly important. which is still subject to the vagaries of nature. a better indicator reflecting national growth and income is the Gross National Disposable Income (GNDI) which includes these transfers (besides net factor income from abroad).67%. Since 2004-05 the growth rate of services sector is at 10 per cent. compared with 1.1% a decade earlier. India’s share in global services export is around 2.1% in 2005-06 and 54. respectively. 2005-06 and 2006-07 were 9. The absolute value of GNDI has been higher than GDP for India. Thus there is no doubt that India’s growth in the last decade has been service led.8 per cent.11% share in world merchandise trade (209-2010).43% per annum from a low level of US$ 11 billion in 1991 to US$ 160 billion in 2008. A large part of India’s services sector is untapped & rarely explored in international market. 9. which can be done with considerable ease compared to other sectors. The GDP growth performance of the Indian economy during 2003-04 and 2004-05 indicated a possible ratcheting up of the trend rate of GDP growth of the economy from 6% to about 7% per year.6% in 1993 to 54. India’s Services Export Trend India’s services export increased by 80. India’s rank among leading services exporters in the world moved up from 22 to 9. While for the medium and long term. this share will increase by another 6.0% in 2005-06 and 9.0 per cent.4% in 2006-07. Services sector in India contributes 57. The growing remittances in the balance of payments.8 per cent and 11.6 percent.68% of country’s total export in the year 2008. in the short and even medium term.

There are sectors where a lot of complementarily exists between services & manufacturing growth e. A transition is being noticed from agriculture . www. shipbuilding along with ship repair & maintenance services and shipping where growth is sure with growth in volume of trade. Another major & upcoming service industry has been media & entertainment. The recent growth in export of professional services is an example of the potential of other services. Telecom Services and Telecom equipment manufacturing. etc.Source: Barriers in Trade in services. poultry. R&D services and Pharma & biotech sectors. . Being one of the largest industries in terms of gross revenue & foreign exchange earnings. Till now. Prabir De .unescap. Services sector growth can also complement growth in manufacturing sector. financial. Domestic Service Industry constitutes trading. Thus the services sector has high potential.g. Identifying and promoting the growth of these sectors with considerable backward – forward linkages can help growth of both services and manufacturing and some manufacturing subsectors can ride piggy back on the success of the complementary services to achieve quick growth. social & personal services. We have many such niche sectors in services. accessed on 12/12/2010 Sectoral Growth Domestic service industry is the large & most dynamic part of Indian Economy both in terms of employment potential & contribution to national income. healthcare services and pharmaceutical sector.org/tid/artnet/mtg/reformservice_prabir. Along with these travel & tourism sector has to be developed in sustainable manner. electronic hardware & software where a hardware-software combination can accelerate growth of both hardware and software as suggested in the Medium Term Export Strategy (MTES) of the Department of Commerce. construction etc. we have been focusing mainly on software. transportation. horticulture. as well as gives momentum to growth of service exports.based economy to knowledge – based economy. it stimulates growth & expansion in other economic sectors like agriculture. The growth rate in services has been higher than that of Agriculture & Manufacturing sectors.pdf . The most important services in the Indian Economy have been health & education. as well as community. Sector annual growth rate is about 28% during the last 5 years. real estate & business services. transportation & communication. handicrafts.

Architectural. Travel Tourism expenses in India II. legal services. advertising/trade fair. Environmental services (in total 12) h) Personal. Agricultural. operational leasing services. accounting/auditing services. R&D services. Business management & consultancy services. engineering & other technical services. Insurance a) Insurance in export b) Premium Life Non-life Reinsurance from foreign companies c) Commission on Business received from foreign companies d) Others IV. trade related services. cultural & recreational services i) Refunds/rebates j) Other services TOTAL (a to j) . Mining & onsite processing services. Transportation a) Sea Transport Surplus by Indian companies working abroad Operating expenses of foreign companies in India Charter hire charges b) Air Transport Surplus by Indian companies working abroad Operating expenses of foreign companies in India Charter hire charges c) Freight on export d) Others III. a) b) c) d) e) f) g) Miscellaneous Communication Services Construction Services Financial services Software services (IT services & ITES-BPO) News agency services Royalties. Government not included elsewhere a) Maintenance of foreign embassies & diplomatic missions in India b) Maintenance of international and regional institutions in India V. copyright & license fees Business services (Merchanting services. maintenance of offices abroad services.Services Exports: By Sub-Categories Services (Total) I.

aspx?ReportId=91 . UNCADSTAT. noticed growth from USD 112. cultural & recreational services have shown a significant growth from 2000 to 2009 with total export of USD 707. Royalties & license fees etc. Personal.unctad.org/TableViewer/tableView.80 billion in 2008. http://unctadstat. Insurance. UNCADSTAT report for Indian services export trend. 2000-2009 Source: International Trade in Services. accessed on 21/12/2010 As per International trade in services. construction.46 billion to USD 798 billion (2000-2008).85 billion to USD 911. Total services export has grown from USD 166. accessed on 21/12/2010 .aspx.Services Export Trend. Total export in other services like communications.org/TableViewer/chartView.68 billion in 2000 to USD 386. Computer & Information. UNCADSTAT. 2000 – 2009.unctad.06 billion. Source: International Trade in Services.19 in 2008. Financial Services. While Government Services dropped from USD 653. http://unctadstat.

Total revenue generated was USD 58. Further all goods and services traded by e-commerce will be important and India has a potential to provide these services. Indian Software & services industry grew at modest rate of 12. educational services. Computer & Information technology services in export side. Despite of the severe global recession.61%.7 billion in 2008 – 2009 including domestic & trade in exports. CAGR of 48. auditing and book keeping services. In fact there is a great potential for India to be an outsourcing destination for many of the above services. Whereas there has been drop of 15% in Commercial services trade (Exports) as compared to 2008. printing & publishing services. India has to build up on the initial advantage it has gained in software and IT related services.5 % has been noticed for software products & engineering services. medical and dental services. nurses. R & D services. thus has a significant contribution in service exports from India.73 billion in 2000 to USD 49. Rest of World . some financial services. repair of ships. architectural and engineering services (along with construction). physiotherapists and paramedical personnel. accounting. Other business services including management and other consultancy services.38 in 2008. increased from USD 4. The list of services (other than software services.6% of economy’s total export was in other commercial services excluding transportation & travel services which show that most of the trade from India is in commercial services (Exports). grew by over 118% per annum contributed about 47% of India’s total services export in 2008.data available shows that the sector has produced new opportunities in international market.9% in 2008 – 2009. 75. The trends & pro . services by midwives. and standardization & quality assurance services. satellite mapping services. tourism and travel related services and transport services) which are particularly important for India are: professional services including legal services. telecommunication services. India vs.Important Services Sectors Computer & Information technology services and Commercial services are two prominent sectors in India’s services trade. entertainment services like films. In 2009 share in world total exports was 2. Important services for India India has export potential in all skill-based and labour-based services.

DGFT. Maritime Transport Services. which are expected to more than double to $305. SEPC was registered under the Societies Registration Act in November. Accounting/auditing & book keeping services. 10.html Government Initiatives & Foreign Trade Policies “Services Export Promotion Council” Ministry of commerce has taken up an initiative to build an infrastructure for services export by establishing Services export promotional council which is taken in to consideration from this year 2011. with a view to give proper direction. Services exports could surpass merchandise exports. Entertainment services including audio-visual Services. Merchandise According to the Federation of Indian Chambers of Commerce and Industry (FICCI) survey. Educational Services. 2. 3.5 billion in the next five years. Government of India. 6. included SEPC in the list of the recognised Export Promotion Councils. vide Gazette Notification dated 5/3/2007. 4.com/blog/2007/04/05/india_services_exports_to_hit_310_billion_and_surp. physiotherapist & paramedical personnel. Architectural services & related services. 7. 5. Distribution Services.metrics2. SEPC has been mandated to promote export of services in the following sectors:1. 9. Source: Projected Exports of Services & Merchandise. Environmental Services. guidance and encouragement to the Services Sector. 8. . 2006. has set up an exclusive Export Promotion Council for Services in the name of Services Export Promotion Council (SEPC).(II) Future Prospect & Institutional Support Projected Exports of Services vs. Advertising Services. http://www. Healthcare services including services by nurses. Ministry of Commerce and Industry. Consultancy services.

To take up various issues/problems and suggestions connecting with Services. providing commercially useful information and assistance to members in developing and increasing export of Services. discussions. correspondence or otherwise. To promote exports of Services from India by such methods as may be necessary or expedient and without prejudice to the generality of the premises by:i. Shri Lalit Bhasin. 13.11. communicating with the chambers of commerce and other mercantile chambers of commerce. conferences and meets in India and abroad. books. Shri Rajesh Sharma has been appointed by the Central Government. who is the Director General and CEO of the Council. iii. Promoting interaction between Services providers and government both at central and state levels. Eminent personalities. B. compiling statistics and other relevant information regarding international trade in Services. maintaining liaison with agencies dealing in international trade and Services so as to promote export of Services from India. organizing visits of delegations of members to explore opportunities for Services. Legal services. participation in seminars. Printing & publishing. with government and international agencies to promote interest of Services providers. renowned cardiologist. organizing. offering professional advise to members in areas such as technology upgradation. C. ii. viii. xii. Naresh Trehan. 14. iv. Aims & Objectives A. standards and specifications of the products and Services. trade fairs/exhibitions/buyer-seller meets. vi. To channelize financial assistance rendered by the central government to members for assisting their export market development efforts. disseminating information useful to members by literatures. other mercantile and public bodies in India and abroad for promoting measures for the advancement of exports of Services from India. undertaking market studies in individual foreign countries on regular as well as an ad hoc basis. Hotel & tourism related services. vii. Marketing research & public opinion polling services/management services. 12. professional bodies. quality and design improving. are the Chairman and Dr. x. v. is the Vice-Chairman of the Council. renowned advocate. Management of the Council The management of the SEPC vests with the Central Governing Council elected by member. xi. . disseminating information regularly and continuously in foreign countries regarding the potential image of Indian Services sector and informing the public in foreign countries the advantages of availing Services from India. ix.

office furniture and consumables. generally and in relation to specific countries and sectors. provided it is part of their main line of business. accept. promotion organizations in India and similar bodies in foreign countries and with international organizations working in the field. To obtain from the members and to prepare for the Council as a whole. who are members of SEPC. etc of the Council’s properties and assets. whose objects are. etc. They shall be entitled to duty credit equivalent to 10 percent of the foreign exchange earned by them in the preceding financial year. the Government of India has aimed to accelerate growth in export of services so as to create a powerful and unique ‘Served from India’ brand. K.D. whether incorporate or not. All services providers who have a total foreign exchange earnings or earning in Indian rupees which are otherwise considered as having been paid for in free foreign exchange by RBI. To invest the money of the Council in any Bank approved by the Governing Council and the money received from the Central government as per directions of that government. Companies or Corporations for construction of building(s) and to furnish Companies or Corporations for construction of building(s) and to furnish security by way of mortgage. Financial Institutions. F. setting of export target. make. Ministry of Commerce & Industry administers a scheme known as Market Development Assistance (MDA) Scheme for the promotion of exports including services exports. I. become a member of and cooperate with any other Association. J. similar to those contained in this Memorandum and to obtain from and to communicate to any such Association such information as may be likely to fulfill the objects of this Council. are eligible for financial assistance under MDA scheme for participating overseas “Buyer Seller Meet” or in any international conference to showcase their service capability. charge. To collaborate in kindred activities with the other export promotion councils/export E. endorse. To avail of loans and financial facilities from banks. To subscribe for. development of exports markets. of at least Indian rupee 10 lakhs in the preceding or current financial year shall be eligible to qualify for duty credit scrip. L. altogether or in part. of the Council’s properties and assets. office equipment and professional equipment. . With the new Foreign Trade Policy (2009-14). To draw. on an annual basis and for such medium and long terms as may be considered desirable and to ensure/undertake execution of such plans. To enter into contracts. Service Exporters. generation of production for exports. To construct building(s) and to furnish security by way of mortgage. G. discount and execute negotiable instruments. In addition to this all service exporters are also entitled for EPCG and other benefits as provided under FTP 2009-2014. To do all such other lawful acts as would be conducive for the promotion of exports and to the interests of the Council or incidental to the attainment of the above objects or of any of them. action plans for promotion of exports of Services. Duty credit entitlement may be used for import of any capital goods including spares. charge. H.

NASSCOM's membership base accounts for over 95 percent of IT-BPO industry revenues in India and employs over 2 million professionals. software services. visa/work permits and business partnerships. It also spotlighted India's edge as an outsourcing destination and the unmatched value proposition offered by the country's IT-BPO service providers. Hyderabad. As part of this initiative. registered under the Indian Societies Act. Building international linkages and creating partnerships with global trade bodies is a key focus for NASSCOM. NASSCOM's member and associate member companies are broadly in the business of software development.Development Initiatives by NASSCOM NASSCOM (National Association of Software & Services Companies) was set up in 1988. Inward and outward . the government. NASSCOM worked with international Governments to create regulatory frameworks that would foster trade with the Indian IT-BPO industry. customers and associations to collaborate on issues related to international policy. The focus of the global trade development programme is to engage with international stakeholders. India. with over 1200 members. BPO services. engineering services off shoring and animation and gaming. It is a global trade body. During 2010. software products. e-commerce and web services. with regional offices in the cities of Bangalore. as a not-for-profit organisation. 1860. position India as a trade partner and promote global sourcing in new markets and verticals. Kolkata. consulting services. Currently. Mumbai and Pune. NASSCOM is headquartered in New Delhi. which include both Indian and multinational companies that have a presence in India. Chennai. GLOBAL TRADE DEVELOPMENT PROGRAMME The Global Trade Development Programme is designed to sustain India's edge as a favourite destination for IT and IT-enabled outsourcing. NASSCOM® is the premier trade body and chamber of commerce of the IT-BPO industry in India. NASSCOM continued to strengthen India's credentials as a key global IT-BPO hub.

The summit hosted by the Indian Embassy in Beijing was a strategic attempt to raise awareness about the capabilities of the Indian IT industry and how Indian IT companies could add value to Chinese enterprises. India witnessed an increase in the Foreign Tourist Arrivals (FTAs) from 2. India’s performance in tourism sector has been quite impressive. presented EU and Indian decision-makers with an opportunity to reaffirm the EU-India Partnership at a time of global economic uncertainty and to explore how India's IT services sector could effectively contribute to fostering economic growth and innovation in Europe. India–China Business and Technology Cooperation Summit 2010 organized in China The programme for the summit was conceptualized by NASSCOM and supported by CII. There was participation from 15 Indian IT companies and 300 attendees from state-owned Chinese enterprises. State Governments/UTs and the Private Sector for the development and promotion of tourism in the country. Enhancing the EU-India Partnership Harnessing EU and Indian IT leadership for fostering competitiveness and innovation NASSCOM brought together ambassadors and high level diplomats from the EU member states to the Embassy of India in Brussels in May to discuss challenges and opportunities for EU-India cooperation in the IT sector. This Ministry is headed by the Union Minister for Tourism and supported by Minister of State for Tourism. Initiatives by Ministry of Tourism The Ministry of Tourism is the nodal agency for the formulation of national policies and programmes and for the co-ordination of activities of various Central Government Agencies.” The training includes a field study and internship. Its objective is to leverage and communicate exemplary social initiatives undertaken by the Indian ITBPO industry for greater social good. NASSCOM FOUNDATION (NF) NASSCOM Foundation aims to channelize the potential of the IT-BPO industry towards inclusive development of India. country reports that highlight market opportunity assessments. People from a partner organisation are undergoing a master training programme in “training rural youth in BPO skills.delegations. NASSCOM Knowledge Network (NKN) The NASSCOM Knowledge Network (NKN) is a dynamic network of telecentres or knowledge centres that are run by NGOs with support from the NASSCOM Foundation and its resource partners. NF will support and handhold the partner organisation to start two rural BPO training centres in Pondicherry. After the training. During the period 2002 to 2009. The exclusive event. MoUs with relevant trade bodies are some of the key activities of this program.38 million to 5.11 .

3 per cent. growth rate in FTAs during 2009 fell by 3. The year witnessed a contraction in global tourism by 4. Also. 8. 54.3 per cent. There have been several innovative approaches in the Ministry’s policy in 2009-10. etc.million.. In order to ensure that development takes place in a holistic and integrated way and inter-state bottlenecks are removed. 7. 4. H1N1 influenza pandemic.960 crores in 2009.3 per cent. This was backed by extensive monitoring of projects in the States/ UTs by the officials of the Ministry of Tourism. Due to global slowdown. inter-state regional conferences were held. Tourism in India has come into its own as a brand – India Tourism. therefore. The creation of niche tourism products like heliport tourism. The growth rate in earnings in 2009 vis-a-vis 2008 was 8.064 crore in 2002 to Rs. States/UTs are setting up State Level Monitoring Committees (SLMCs) at State/ UT level to hold periodic monitoring meetings to review the status of implementation of tourism projects. The Ministry is the year 2009-10 witnessed heightened engagements of the Ministry of Tourism with the States/ UTs to strengthen initiatives to promote tourism to a new height. 5. the declaration in India was. 6. Foreign Exchange Earnings (FEEs) from tourism increased from Rs. adventure tourism. wellness tourism. A major step has been the issuing of guidelines to State Governments/union Territory administrations for development of tourism infrastructure that is world class. cruise tourism and caravan tourism has served to widen the net of this sector. 1. No. terrorist activities. 15. This software permits online submission of projects and utilisation certificates as also the reporting of the status of implementation of projects. Priorities S. Priority Development of Tourism Infrastructure Monitoring of tourism infrastructure projects Accommodation for tourists Publicity and Marketing Human Resource Development Approval of travel trade establishments & rationalization of taxes Developing new tourism products Market Research Total Weight 25 5 10 15 20 5 10 10 100 . medical tourism. recognising the need for monitoring of projects supported by Central Financial Assistance. At the instance of the Ministry. new Project Monitoring Information System (PMIS) software has been designed. less than that of the scale of global slowdown. 2. 3.

introduced by the Ministry of Home Affairs for patients and their Attendants coming to India for medical treatment. etc. Cruise tourism a. Best hospitals and price banding for various specific treatments. reinforced by liberalization policies and the removal of regulatory obstacles has fuelled steady growth of international investment and trade in services. Caravans are unique tourism products. Promotion of Caravan Tourism and Caravan Camping Parks a. particularly the financing and transportation of goods. the integration of telecommunications and computer technologies has made virtually all services tradable across borders. both as independent service employers and employees. b. Recognition & Awards. 2. 5. Export Opportunities and Export Capabilities for Services Services.New Tourism Products Under Incredible India Programme 1. Preservation and enrichment of natural and cultural resources b. Medical Visa . The convergence between computers and telecommunication technologies has had a number of . Market Initiatives b. In recent years. Ocean cruise b. Rural tourism a. Rapid technological advances in the past few decades in transport. have played an important role in world trade for centuries. Medical tourism a. 7. Development of Camp Sites 8. 6. The trend of globalization. Better communications and multinational enterprises have also facilitated the movement of people. computing and telecom have resulted in enterprises making use of distant resources for production and serving wider markets. Promotion and marketing of eco-tourism products in domestic and overseas markets. Ministry of Tourism has identified 17 overseas Medical/Wellness Tourism related Fairs & Exhibitions for which Medical Tourism Service Providers/Facilitators and Wellness Tourism Service Providers are provided financial support under MDA (Marketing Development Assistance) Scheme for participation. Adventure tourism 4. River Cruise 3. Naturopathy. Eco-tourism a. b. Yoga. Siddha. Positioning India as a centre of Ayurveda. the focus of services trade has shifted away from just facilitating trade in goods as the sector has emerged as an independent entity in itself with services trade in the four supply modes opening up new opportunities. Wellness Tourism a. More recently. which promote family oriented tours even at circuits/ destinations where adequate hotel accommodations are not available.

the services related to Ayurveda and Yoga. USA and UK. the 1st stage when the primary sector is the dominant sector in GDP. i. it is important to realize that the constraints in the industrial and agricultural sectors and the natural advantage of India in services sector has led to a services led growth of the economy. In the case of super-specialty hospital services. Even among the major markets. the indirect effects of exports of services is high on the domestic growth of services and even industry. There is in fact a need to tap our full potential in the services sector. locating the work force of a firm anywhere in the world. both skilled and unskilled services are taken. Middle East. are related to important services in exports like travel and transportation. Development theory usually identifies three stages of development. there are the under-penetrated English speaking markets of Canada. Rather than debating on which growth strategy is ideal. Though external trade is taken only ‘net’ in the GDP and its effect may not be felt directly as the deficit in merchandise trade overshadows the positive balance in services trade. Germany.e. though great scope exists in markets like USA. Similarly growth of shipping services and travel services exports can have a direct bearing on domestic industries related to these services. As per the NASSCOM-McKinsey report 2008. and Japan and some other OECD countries who are the major demanders of commercial services. India’s export effort is still in its early stage. particularly unskilled and semiskilled services. entertainment services. Nepal. the composition of the import basket differs and accordingly the importance of the different services for different countries differs. which if marketed well can be demand-creating like satellite mapping services. But there are some services. if labour services. The dynamic growth of professional services exports has a bearing on the growth of these services domestically. Bangladesh. in the case of IT services. etc. the domestically dynamic services like trade. as long as they can telecommute to work. Italy which should be fully tapped. Focus Markets for India’s Services In the case of services.significant consequences for the competitiveness of services like making it possible for firms to provide services rapidly and conveniently. Sri Lanka. . the second stage in which manufacturing is dominant and the third stage in which the tertiary sector is dominant and is identified with countries in an advanced stage of development. Netherlands. transport and communications etc. hotels. The growth of the Services sector and consequently the growth of the Indian economy perhaps have a trade angle. The growth in export of software services has given fillip to domestic production and use of these services. Mauritius. Malaysia etc. then we have the Gulf countries as the major importers of labour services. Sweden & Australia and the under-penetrated non-English speaking markets of Japan. besides the traditional markets. EU. For example. However. there is no need to expect the hare to sleep for the tortoise to overtake it. While the constraints in the other two sectors need to be removed as is being attempted now. the first tier of markets for commercial services as of now are clearly the US. India’s growth experience does not seem to follow this theory of stages as the high growth and high share of services sector which is a feature of a developed economy has been attained by India even before reaching a developed stage. France. etc.

The importance of the vast and growing export business opportunities for India’s services sector can be seen by juxtaposing the import demand of major service importers with Indian export capabilities Competition & Trade Barriers for Indian Services Export In the case of Business Services and IT services  Access to the US market. African countries and even some developed countries. ship repairs. In the case of Telecom . Washington D. Some courses like Ayurvedic medicines. South Africa. printing technology. and California allow foreign lawyers to practice within the state. Bangladesh. besides the developing country markets. of US like. Texas. South Asian countries and African countries. India can be the hub of advanced printing services for developed countries by making use of its advancement in software.License fees on unrelated activities  The Adjusted Gross Revenue (AGR) as defined by the Department of Telecommunications (DOT) for computation of the license fee includes several revenue streams which are unrelated to service activities of service providers.In the case of satellite mapping services. Policy intervention is this area can help as exclusion of sale of hands pets from AGR can lead to handset bundling schemes with airtime and make India a hub for telecom manufacturing activity. In the case of technology intensive education services. In the case of legal Services  Some states. the potential markets for exports of these services are the Middle Eastern countries. remains nontransparent and unsatisfactory as licensing of professional service suppliers is generally regulated at state level. New York.C. In the case of printing services.125 per cent while it is prohibited for exports). In the case of standardization and quality assurance services. etc. the system and requirements are set by the concerned state bar associations and therefore differ from state to state. In the case of Communication Services  Stringent legislation in US for in radio telecommunications infrastructure. are hardly offered anywhere else in the world.. etc.  There are the ‘Buy American’ provisions and frequently changing visa provisions for work permits and US states passing laws to limit business outsourcing. particularly revenue from sale of handsets. South Africa. Malaysia. India can export these services to Middle East. In the case of Transport & Travel Services  Huge subsidies in the Civil Aviation sector to Aircraft in both US and EU act as indirect market access barriers. In the case of Port Services  Harbour Maintenance Tax (HMT) and Harbour Services Fee in US only on waterborne imports (ad valorem rate of 0. aircraft maintenance. . India enjoys an important position in countries like SAARC countries. Even the TDSAT ruling has not ruled against inclusion of this if it is bundled and not stand alone.

This growth. formulating suitable strategies for WTO and CECAs with strategic partners keeping in view the growth and export potential of this sector are some of the important tasks for a successful domestic services strategy and successful international negotiations in services where the stakes are high for India. Tapping the export potential of this sector by suitable policies. While inflation in some of the categories of services is less. In short the strategy for the services sector should include the following major issues mentioned above. the policy responses will also differ. .The discussed bunch of issues gives a birds-eye-view of the issues for policy making in the services sector. plurilateral and multilateral levels to remove the different visible and invisible market access barriers. • Resolving in a fixed time period. growth of the economy and employment. employment and export oriented sector in India having a proven competitive advantage needs to be given its due attention. • Including services in the inflation index to give a realistic picture of inflation and also in domestic terms of trade to reflect the actual change in distribution of income between all the three sectors. but also between growth and development strategies and multilateral/bilateral negotiations. negotiating at bilateral. the non-inclusion of services in the inflation index when its share in GDP is the highest is an anomaly which needs to be corrected soon. departments and even governments (central & states). • Focus should be on export of untapped services and markets and services with high linkage effects with manufacturing. utilizing the opportunities thrown open by WTO in services sector. the issues are varied as given in the indicative examples and involve different institutions. This will also involve issues related to prices for services. export potential of services and import basket analysis of trading partners. Since different services differ in nature. • Identifying the burdensome domestic regulations in India and reforming them which also include many fiscal issues. the data and definitional issues in services both in the national accounts and external sector including balance of payments. • Identifying the different market access barriers to India’s exports of services and focusing on the important ones for negotiations at bilateral and multilateral levels taking note of India’s domestic growth. while removing our domestic regulations which may have outlined their utility and hinder the growth of this sector. • All this would involve coordinated strategy and policy making for which a single nodal department/division/institution for services is needed. Greater synergy is needed not only between trade strategies and multilateral/bilateral negotiations.

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