Indian exports have been a major driver of growth, be it merchandise or services exports. But as the global economies stare at a possibility of plunging into a recession, the exports-led growth is proving to be a big challenge in front of India. However, Sunil Talati, Chairman, Services Export Promotion Council (SPEC), an export promotion council set by the Ministry of Commerce and Industry, is of the opinion that the target of $300 billion set by the government is achievable.
“In fact, we have raised the target to $350 billion on our own against the target of $350 billion set by the government, but considering the 26 per cent services export growth we have witnessed in first quarter of FY23, we are sure that we will achieve the target comfortably,” Talati of SEPC told Business Today exclusively.
According to Talati, 26 per cent growth in Q1 suggests that services are growing in almost all sectors, especially medical tourism, and hospitality, and hotels are booked fully. “You will not be able to get a room in hotels as of now, also all international tickets are 2-3 times more expensive now, there is tremendous inflow of foreign tourists, foreign patients. Also, the accounting and auditing sector is witnessing roaring growth; a lot of work is coming from US, Canada, and London. That is the reason we are hopeful of achieving the target of $350 billion this fiscal,” the SEPC Chairman explained. Talking about the outlook for services exports in FY24, Talati said that he expects a minimum of 20 per cent growth next year.
All sectors are growing, barring printing, engineering, and entertainment, which is the matter of concern, he added further. Throwing light on the impact of recession in developed economy, he said, “Certainly, I went to US, and there are signboards of jobs required everywhere, all shops and all big malls are empty, there are sales going on and there are still no buyers, the tariffs of all hotels have shot up exponentially. But I think recession in US, plus certain European countries, will definitely have better impact on India,” Talati explained.
Recently, the government extended the existing foreign trade policy by 6 months considering the global economic situation. However, Talati believes that delay of 6 months is a matter of concern. “We were expecting the policy now, the way dollar is strengthening and rupee is depreciating, certain incentives and support is required, so announcing the Free Trade Policy now was very much necessary. We wanted the policy to come very badly,” Talati added.
India is signing Free Trade Agreements (FTAs) with multiple countries to boost exports, and on being asked whether these FTAs will be benefitting services exports, Talati responded, “FTAs, in my personal opinion, is a double edged sword: to what extent the other countries put in terms and condition in trade agreement and to what extent we are agreeing to their terms and condition is something important. For example, UK chartered accountants can come to India, charge royalties and commission and take away a lot of foreign reserve from our country but even if I can give a better service as a chartered accountant in those countries, but I am not allowed to do that in those countries.”
“So, the negations and terms and conditions are something one must be watchful of,” he added. Many experts and industry experts believe that even though there are challenges but services export will remain robust this year and are expected to grow at a faster pace going forward in the next fiscal as well.
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