{"id":193567,"date":"2022-07-01T20:48:09","date_gmt":"2022-07-01T15:18:09","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=193567"},"modified":"2022-07-01T20:48:09","modified_gmt":"2022-07-01T15:18:09","slug":"dont-ignore-the-services-sector","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/dont-ignore-the-services-sector\/","title":{"rendered":"Don\u2019t ignore the services sector\u00a0"},"content":{"rendered":"\n

News:<\/span><\/b> India aspires to become a $5-trillion economy. It is predicated on the growth of its <\/span>international trade<\/span><\/b> to $2 trillion by 2030 which is equally contributed by<\/span> the merchandise<\/span><\/b> and <\/span>services sector<\/span><\/b>.\u00a0<\/span>\u00a0<\/span><\/p>\n

About the Status of services and manufacturing sector<\/span><\/b><\/h5>\n

It comprises over 50% of the GDP, overriding the contribution of both agriculture and manufacturing.<\/span><\/p>\n

The year 2021-22 was an astounding success as the <\/span>manufacturing <\/span><\/b>and <\/span>merchandise exports <\/span><\/b>had crossed the $<\/strong><\/span>400 billion rubicon.<\/span><\/b>\u00a0<\/span>The services exports had exceeded $254 billion, which was an increase of over <\/span>20%<\/span><\/b> year-on-year.\u00a0<\/span>\u00a0<\/span><\/p>\n

India’s merchandise and manufacturing import were <\/span>$600 billion<\/span><\/b> versus our exports of over <\/span>$400 billion.<\/span><\/b> In contrast, India Services exports were over<\/span> $100 billion <\/span><\/b>more than its <\/span>service imports<\/span><\/b>.<\/span>\u00a0<\/span><\/p>\n

Further, around 50% and more of services exports are contributed by IT-ITES. The rest is contributed from management, legal, accounting, logistics, travel and tourism, education, healthcare, etc.<\/span>\u00a0<\/span><\/p>\n

What are the issues with the services sector?<\/span><\/b>\u00a0<\/span>\u00a0<\/span><\/h5>\n

The services sector does not receive the recognition and encouragement in the form of incentives, just like the manufacturing and the merchandise sector.\u00a0<\/span>\u00a0<\/span><\/p>\n

There is a perception that the service sector including IT sector has flourished due to<\/span> minimum government intervention<\/span><\/b>.\u00a0<\/span>\u00a0<\/span><\/p>\n

Further, the service sector as a whole does not require any hand holding support of the government.<\/span>\u00a0<\/span><\/p>\n

Why does India need to focus on service exports?<\/span><\/b><\/h5>\n

This year, the deficit in <\/span>merchandise exports-imports <\/span><\/b>is widening with the impact of rising crude prices.<\/span>\u00a0<\/span><\/p>\n

There is a huge imbalance in the incentives offered between the merchandise export segment vs service export. For example, the <\/span>MEIS (Merchandise Exports Incentive Scheme)<\/span><\/b> provided more incentives than the <\/span>SEIS (Services Exports Incentive Scheme)<\/span><\/b>, even during the <\/span>Covid restrictions<\/span><\/b>.<\/span>\u00a0<\/span><\/p>\n

These incentives serve to make businesse<\/span>s internationally competitive<\/span><\/b> as well as recognise contributions made by service providers.\u00a0<\/span>\u00a0<\/span><\/p>\n

What should be done to improve the service sector?<\/h5>\n

Services sectors beyond IT require careful nurturing, especially <\/span>capex-intensive sectors<\/span><\/b> like hospitality, healthcare and education.<\/span>\u00a0<\/span><\/p>\n

The government should aim to <\/span>quadruple services exports<\/span><\/b> over the next 7-8 years. There should be a <\/span>strategic road map<\/span><\/b> with the right sort of government intervention to achieve the goals.\u00a0<\/span>\u00a0<\/span><\/p>\n

The government should focus on all other sectors (other than IT) to bring exponential growth to the table. For example, consider <\/span>international tourism<\/span><\/b>.<\/span>\u00a0<\/span><\/p>\n

In addition, the government should embark on a <\/span>crash programme<\/span><\/b> to <\/span>enhance infrastructure<\/span><\/b>. For example, PPP Models can be to build more airports and highways, to improve <\/span>physical connectivity<\/span><\/b>.<\/span>\u00a0<\/span><\/p>\n

It requires <\/span>individual entrepreneurship <\/span><\/b>to increase the hospitality quotient by adding more hotel rooms.\u00a0<\/span>\u00a0<\/span><\/p>\n

The government should provide attractive incentives like <\/span>direct taxation<\/span><\/b> for green field projects in <\/span>the services sectors<\/span><\/b>, especially in the building of hotels, hospitals and universities.<\/span>\u00a0<\/span><\/p>\n

The government can bring the scheme for the services sector on lines of the <\/span>Production Linked Incentives (PLI) scheme<\/span><\/b>, in areas like hospitality, education and health care. It will ensure <\/span>capex investment.<\/span><\/b> It will result in increased productivity and avenues for employment.\u00a0<\/span>\u00a0<\/span><\/p>\n

India as a major economy, India\u2019s reliance should be on multiple sectors including, manufacturing and services.<\/span>\u00a0<\/span><\/p>\n

Source<\/span><\/b>: The post is based on the article \u201cDon\u2019t ignore the services sector<\/strong>\u201d published in the Indian Express<\/strong> on 1<\/strong><\/span>st<\/strong> July 2022<\/strong>.<\/span>\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

News: India aspires to become a $5-trillion economy. It is predicated on the growth of its international trade to $2 trillion by 2030 which is equally contributed by the merchandise and services sector.\u00a0\u00a0 About the Status of services and manufacturing sector It comprises over 50% of the GDP, overriding the contribution of both agriculture and… Continue reading Don\u2019t ignore the services sector\u00a0<\/span><\/a><\/p>\n","protected":false},"author":10311,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[216,10500],"class_list":["post-193567","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-3","tag-indian-express","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/193567","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10311"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=193567"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/193567\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=193567"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=193567"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=193567"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}