Key facts
- India's services exports are nearing the level of merchandise exports.
- Services exports have grown at a compound annual rate of 9.3% over the last 12 years.
- India ranks as the 7th largest services exporter globally.
- Software and IT services are major contributors to India's export growth.
- The services sector constitutes over half of India's Gross Value Added (GVA).
India's services exports are on the verge of surpassing merchandise exports, highlighting a significant shift in the country's economic growth drivers. Over the past 12 years, services exports have grown at a compound annual rate of 9.3%, while goods exports have lagged considerably.
Analysis from the Reserve Bank of India indicates that India's services exports have grown at a robust compound annual growth rate (CAGR) of over 14% in U.S. dollar terms for the last three decades, significantly outpacing merchandise export growth and the world's average services export growth. This has propelled India to become the 7th largest services exporting country globally, up from 24th in 2001. Key sectors driving this growth include telecommunication, computer, and information services, which have benefited from digitalization and government initiatives.
The Economic Survey 2025-26 further underscores the services sector's importance, noting it now accounts for more than half of India's Gross Value Added (GVA) and is growing at 9.1% in FY26. Software services alone contribute over 40% to total services exports. This sector's resilience has helped cushion the economy, particularly when conditions in goods trade were less favorable. Foreign Direct Investment (FDI) in the services sector is also substantial, accounting for approximately 80.2% of total FDI in FY23-FY25. While states like Karnataka, Maharashtra, and Tamil Nadu lead in production, areas like ocean commercialization, media and entertainment, and space services are identified as potential growth avenues.