Sounds incredible? Yes, the amount is too big to behold in a single view. Let’s look it from some more dimensions.
- First, look at it from the demand side. India is the export hub for software services. The growth rate expected for Indian IT outsourcing service market is 6-8 % for the next three years. And this alone suggests it to be US$ 1 trillion by 2030.
- Now look at the competitive advantage with India. India has a very large pool of skilled manpower and very competitive costs in IT and ITeS sectors. And this pool is growing continuously.
- Third is the flurry of policy support measures. The Make In India initiatives of government of India, India’s continuously expanding entrepreneurial ecosystem, the physical environment, and compatible interrelationship with education, finance and industry has gone across the entire spectrum of services sector. The GST doesn’t charge anything for education and health services.
- Fourth is the finance. According to data released by the Department for Promotion of Industry and Internal Trade (DPIIT), the service sector ranked 1st in FDI inflow in India. The services, including Financial, Banking, Insurance, Non-Financial / Business, Outsourcing, R&D, Courier, Tech Testing and Analysis & Other category attracted cumulative foreign direct investment (FDI) In the first half of 2021, the private equity investments has been US$ 11.82 billion, which is more than double in the same period last year.
Share of the services sector accounted for 55.39% of the total Gross value added (GVA) in FY21. This index excludes the cost of all inputs and raw materials that are directly attributable to the concerned production.
India’s services sector GVA increased at a compound annual growth rate (CAGR) of 11.43% to Rs. 101.47 trillion in FY20, from Rs. 68.81 trillion in FY16.
This sector provides employment to a large share of Indian population. Services exports comprise a major part of the total export from India. According to RBI, in April 2021, service exports stood at US$ 21.17 billion, while imports stood at US$ 10.61 billion.
The policy aspect
The Government has undertaken various steps towards boosting growth of the services sector. Here are some of the policy initiatives of the government of India:-
- In the healthcare sector, the telemedicine market is driving growth with the increasing demand for remote consultation. By 2025, the telemedicine market in India is expected to reach US$ 5.5 billion. By June 2021, the Health Ministry’s eSanjeevani telemedicine service crossed 6 million (60 lakh) teleconsultations since its launch, enabling patient-to-doctor consultations, from the confines of their home, and doctor-to-doctor consultations.
- In fact, the home healthcare industry in India is expected to reach US$ 10 billion by 2025.
- A credit incentive programme by the government of India worth Rs. 50,000 crore (US$ 6.8 billion) to boost healthcare infrastructure in the country is in the pipeline. The programme will allow companies to access funds to ramp up hospital capacity or medical supplies with the government acting as a guarantor.
- In December 2020, a cohort of six health-tech start-ups—AarogyaAI, BrainSightAI, Fluid AI, InMed Prognostics, Wellthy Therapeutics, and Onward Assist—have been selected by the India Edison Accelerator, fuelled by GE Healthcare. India Edison Accelerator, the company’s first start-up partnership programme focused on Indian mentors, creates strategic partners to co-develop healthcare solutions.
- In March 2021, various states and UTs started implementation of the ‘Intensified Mission Indradhanush 3.0’—a campaign aimed to reach those children and pregnant women who were missed out or have been left out of the routine immunisation programme due to the COVID-19 pandemic. This is aimed to accelerate the full immunisation of children and pregnant women through a mission mode intervention.