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Service exports recovery likely by year-end: FICCI

business Updated: Nov 01, 2009 11:45 IST
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India's exports of services, which declined in the first two quarters of 2009, will return to growth by the year-end, according to a report by the Federation of Indian Chambers of Commerce and Industry (FICCI).

The overall services exports declined by seven per cent during January-March this year and by three percent in the subsequent quarter as compared to a positive growth of 14 percent and 22 percent respectively in the first two quarters of 2008.

"All the major segments of services exports except insurance and financial services witnessed contraction since January 2009," the chamber said in the report.

Added FICCI president Harshpati Singhania: "This has resulted in a subdued growth of 12.4 percent in India's total services exports in 2008-09 as compared with over 22 per cent increase in 2007-08."

The report said India's exports of software services declined by 14 per cent in the first half of 2009.

Earnings from travel fell by 26 per cent during the January-March quarter and by nine percent in the subsequent quarter, signifying the effect of the slowdown on tourist arrivals.

Tourist arrivals were down by 9.5 per cent in the second half of 2008-09 and by 1.8 per cent in first quarter of the current fiscal, the FICCI report said.

Receipts from trade-related services dipped sharply by 56 per cent and 27 per cent respectively in the first and second quarters of 2009, it added.

Among other major segments, communication and business camp, professional services including management consultancy, architectural, engineering, technical and other business services also registered negative growth ranging from four percent to 53 percent.

In recent years India has made rapid stride in services exports and improved its share in worldwide exports from 1.2 percent in 2000 to 2.7 percent in 2008.

India's rank among leading services exporters in the world moved up from 22 to nine, with the value of commercial services exports from India rising from $17.6 billion to over $102 billion in the same period.

Services exports to the gross domestic product (GDP) ratio currently stands at around nine percent.

According to FICCI, the negative growth in the last two quarters is "a temporary phenomenon and our services exports have the resilience to make a quick recovery".

Said Singhania: "India has the capability to double its share in the global services exports in the next four-five years."

But for that, he said, the developed world should offer "effective market access" for the service providers and professionals from India and other developing countries.