India's service exports to touch 1 bln by 2012

New Delhi, Apr 5 (UNI) India' share in world services exports will triple from the current 2.3 per cent to six per cent in the next five years and will surpass the merchandise exports to reach 311 billion dollars by 2012, an industry body said today.

According to FICCI estimates, the expected level of merchandise exports by 2012 is 305 billion dollars.

''With the current rate of growth in services exports to continue in the medium-term, India's exports of services will be powered by software services, business and management consultancy services, architectural services, engineering and other technical services, tourism services and other professional services,'' FICCI President Habil Khorakiwala said here.

The chamber said on a calendar year basis, India currently exports more than 56 billion dollars of services to the world while its merchandise exports are over 100 billion dollars.

On an average, India's services exports are growing at the rate of 28 per cent per annum for the last 5-6 years and merchandise exports have increased by 22 per cent annually for the same period.

It stated that if the current trend in growth of services exports from India continues, the share of services in country's total exports would rise to about 50.4 per cent by 2012 from the present level of 37.1 per cent.

In the first three quarters of the just concluded fiscal year, exports of software services, professional and business services, travel and transportation services have witnessed strong growth ranging from 20 per cent to 98 per cent.

Nearly 100 per cent increase in exports of business services between April-December 2006 and the corresponding period of 2005 reflects the underlying growth momentum in exports of professional as well as technology-related services, the chamber noted.

It added that despite the widening trade deficit of 19 billion dollars for third quarter of 2006-07 currently, account deficit has narrowed down to three billion dollars from 4.8 billion dollars in the same period largely due to significant growth in these service-segments.

Comparing services exports of China and India, the body stated that while China's exports of commercial services at 74 billion dollars are now more than that of India, latter's exports of commercial services would cross that of China in 2009.

As the average annual growth rate of services in case of China is 19 per cent for the past five years. By 2013, India's commercial services exports could be some 100 billion dollars higher than that of China.

The commercial services exports from China are projected to be around 300 billion dollars while that from India would be 397 billion dollars by 2013.

India's services exports have enormous potential to grow due to its labour cost advantage and rising share of working age population.

UNI