MAKE IN INDIA: India poised to achieve Services Export target of $1 Trillion by 2030

The 2021 G20 Summit in Rome: India’s steady endeavours towards achieving G20 goals

People, Planet, Prosperity’ are three pillars of this year’s G20 agenda that resonate, more than any other thematic topic of discussion, with the current thinking around trade and investment. The massive collapse in global trade and investment flows during the prolonged wave of the coronavirus pandemic in 2020 was unprecedented. Foreign direct investment (FDI) worldwide fell 35% from $ 1.5 Tn in 2019 to a $ 1 Tn1 in 2020, urging countries across the world to refocus their attention to building a resilient, inclusive, and sustainable global economy on the path to postpandemic recovery. The G20 Trade and Investment Ministerial Meeting, held on 12 October 2021 in Sorrento, concluded with precisely the recognition that a future-ready economy is founded on the basis of a rulesbased, non-discriminatory and transparent multilateral trading system which works to ensure prosperity for the people of this planet2. An extensively engaging year of deliberations within this uniquely challenging context, with Italy leading the framework as G20 President, culminated in the G20 Summit on 30-31 October 2021 in Rome.

India’s FDI figures reveal a remarkably positive upswing when viewed in contrast to comparable world figures. Total FDI inflows amounted to $ 64 Bn in 2020, a 27% increase from $ 51 Bn in 2019, making the country the fifth largest FDI recipient in the world3. Foreign investment in India has been boosted, along with the robustly growing appeal of the information and communications technology (ICT) sector, also by the country’s fierce commitment to develop its trading and investment environment through coordinated action and joint partnerships. These tenets form the core of the G20 Rome Leaders’ Declaration adopted at the end of the G20 Summit, which pledges to act upon specific points of action agreed through consensus in areas including healthcare, innovation and technology, environmental sustainability, trade and investment, and support to vulnerable countries for ensuring a level playing field. Over the duration of 2020-21, India has brought to the table a host of policy changes and taken concrete initiatives that have, going forward, set a solid foundation for the country to jointly support other world leaders in accomplishing the goals of the Sorrento Declaration.

The importance of developing a robust public health system to support future trade and investments has been brought to the forefront amidst the global pandemic. India has particularly been a champion in the healthcare space, with the number of coronavirus vaccine doses administered reaching a landmark threshold of 1 Bn on 21 October 2021, making it the second country in the world after China to achieve this mark4. This tremendous feat in the fight against the global pandemic has been aided by the allocation of INR 35,000 crores (around $ 4.7 Bn) as part of the Union Budget 2021-22 towards the development and manufacturing of vaccines, leading to a whopping 137% increase in the total budget outlay for healthcare in FY 2021-22 compared with the previous year5. Equitable, timely, affordable, and cross-regional access to emergency medical products and services forms an essential backbone of a strong business operating environment. The recently launched Production Linked Incentive (PLI) Scheme for Promotion of Domestic Manufacturing of Medical Devices6 is another testament to India’s efforts at guaranteeing a level playing field for domestic manufacturers of medical equipment and further boosting domestic manufacturing for critical future supplies across the world. Prime Minister Narendra Modi’s pledge during the G20 Summit to make India ready to produce 5 Mn vaccine doses by the end of 20227 shows India’s unwavering commitment to work with G20 leaders to address the inequity in access and distribution of vital healthcare goods. Equipped with essential industry resources and competent health professionals, India’s capacity to contribute to international public health efforts and creating resilient industry supply chains is all the more heightened and proven to yield enormous gains.

Another G20 priority revolves around utilizing the enormous potential of technology as a major conduit through which a post-pandemic recovery can emerge. The Union Budget 2021-22, for the first time, comprises a pillar specific to innovation and research and development (R&D)8. While recognizing the existence of a persistent digital divide across nations of varying income levels, the ability of various pockets of India’s economy to continue functioning highlights the encouraging impact that the development of digitalization can have, particularly in building resilience against future shocks. India’s population is already on its way to get ready for a digital transformation. Between June 2020 and June 2021, digital transactions based on Unified Payments Interface (UPI) increased by 110% in volume and 109% in value9, indicating consumer ease and preference for digital payments. The ever-growing market of digital consumers in India provides the country with an unparalleled competitive edge in harnessing technology to facilitate the operations of entrepreneurs and businesses, whether big or small. The National Single Window System, launched in September 202110, capitalizes on this digital boom to provide for unified and integrated business procedures for foreign companies investing in India. The country’s latest initiatives to build a robust digital ecosystem supported by skilled human capital directly coincides with the long-term G20 objective of building a more inclusive and accessible digital economy that constantly innovates to find new solutions to evolving challenges in our world today.

During the past year in the lead up to the main G20 Summit of 2021, India participated in crucial consultations and achieved defining successes along with the leaders of today’s major economies. Clear-cut objectives were outlined, languages for actionable points were refined, and stronger commitments were made to engage in purposeful multilateral action. India, in particular, proposed large-scale and ambitious plans for its own development, making it clear that the steps taken henceforth on the path to economic recovery will require a new lens through which joint partnerships and collaborations are viewed with peer countries in the G20. Multilateralism has indeed taken on a new meaning in today’s uniquely challenging and demanding world, and there is new hope that the goals defined resolutely on one of the largest global platforms will seek to truly benefit every citizen.

Source: Invest India, Government of India

Ministry of Commerce Release,

9 November 2021: The Minister of Commerce and Industry, Consumer Affairs, Food and Public Distribution and Textiles, Shri Goyal on November 9 said that India is poised to achieve services export target of $1 trn by 2030. He was addressing the gathering at the 'Services Export Promotion Council- Global Services Conclave 2021” in New Delhi on November 9. The Minister said that Services are a key driver of India’s economic growth. He added that the services sector provides employment to nearly 2.6 crore people and contributes approximately 40% to India’s total global exports. He added that Services trade surplus was $89 bn in FY 2020-21 and it has been the largest FDI recipient (53% of FDI inflows 2000-2021). The theme of the Global Services Conclave 2021 was ‘India Serves: Exploring Potential Growth Sectors Beyond IT/ITes'.

Emphasizing that the Service sector is our competitive advantage, powered by Skills, Startups and IT Solutions, the Minister said that today, Indian services have the twin power of universal acceptance & universal attraction. Lauding India's commitment to enable ‘work from Home’ during the pandemic, Shri Goyal said that, while services trade remained depressed in other countries, India’s services sector showed immense resilience. "Sectors like tourism, hospitality, etc. which suffered due to COVID-19 are showing revival signs" he added. Appreciating the spirit that led to rise through the tough times faced by the sector, Shri Goyal said that tough times don’t last, but tough people do. He expressed his admiration for the selfless service of all frontline workers during the COVID 19 pandemic. The Minister said that in 2020, India became the 7th largest services exporter in the world, moving up the ladder by two positions. Services PMI rose to a decade high of 58.4 in Oct’21, he said. Emphasizing that India had the potential to become the top services exporter in the world, Shri Goyal said that Services is boosting India’s transition from an assembly economy to a knowledge based economy. Global sentiments are changing from ‘why India’ to ‘why not India’, he said. Observing that India has transformed from being the ‘Back office’ to the ‘Brain office’ of the world, Shri Goyal said that today, India’s Services export largely comprises IT/ITes and stressed that we need to focus on other potential growth sectors. The Minister listed certain crucial sectors which can catapult India’s services sector on a high growth trajectory such as higher education. He observed that students from US, Canada etc. prefer India for heritage, art and culture studies. The Minister assured that the Government was actively pursuing market access opportunities (FTAs) and working on a scheme alternative to SEIS. He said that the Government supported service sector through Aatmanirbhar Bharat Package, collateral-free Automatic Loans for Businesses, including MSMEs. Rs. 56,027 Crore was released under various Export Promotion schemes. He spoke of India's initiatives in Skill development, especially in emerging areas like AI, Big Data, Robotics, etc. The Minister also highlighted the need for assisting states in formulating a comprehensive export strategy with districts as Export Hubs. Shri Piyush Goyal said that the Government as a facilitator and enabler, helped Indian Services to grow & touch lives across the globe. He emphasized that Zero Government interference has enabled IT sector to excel. He appreciated the sector for not pursuing incentives but standing on its competitive strength. Charting the way forward, the Minister said that we must introduce more standards & improve quality. We must move up the value chain in services and pick areas where our strength lies and expand on that, he said. He also said there is a need to expand markets for Legal/Accounting professionals. Quoting Shri Atal Bihari Vajpayee, Shri Goyal said that "Our aim may be as high as the endless sky, but we should have a resolve in our minds to walk ahead, hand-in-hand for victory will be ours".