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'India's services industry upbeat'

india Updated: Nov 05, 2006 16:29 IST

India's globally applauded services industry sees seven to eight per cent growth in July-December on expectations of new investments, repeat orders and expansion plans, an industry study reveals.

"The services sector expects a growth between seven and eight per cent from July-December and has major expansion plans," the Confederation of Indian Industry (CII) said in a report released here on Sunday.

The first-ever Services Sector Business Outlook Survey conducted by the CII says 92 percent companies are planning investments of over Rs 10 million ($222,000) during the six-month period and 28 percent plan investments of Rs.50 million ($1 million) and above.

Better sales, new projects, repeat orders and customers and billing rates are driving the positive outlook with as many as 60 percent indicating that they are moving up the value chain.

A whopping 83 percent voted new customers as the reason for the positive business outlook. The survey included companies engaged in business, communication, construction and related engineering services, distribution, education, environment, finance, health, tourism and travel, recreation, culture and sports.

With the services sector contributing 54 per cent to India's economic growth, the positive outlook has led 83 percent respondents to expect a corresponding growth in employment opportunities.

"Things look bright on the export front as well," according to the survey. An 81 percent of the respondents expect a rise in the value of exports, with new customers and billing rates during July-December adding to the optimism.

However, respondents feel that constraints on the movement of natural persons (by many of the countries) would remain unchanged, states CII.

One third of the respondents felt the constraints on the movement of natural persons may increase during the next six months and have called for measures to mitigate existing restrictions on such movement.

India and several developing countries have been pursuing the matter of greater freedom in the movement of people for employment through the World Trade Organisation (WTO) negotiations.

The CII survey says the service industry is also upbeat about the economy. More than half (54 per cent) the respondents expect the GDP to grow at over 8.0 percent during 2006-07.

This reflects its performance during the first quarter of the current financial year when it grew at 8.9 per cent compared to 8.5 percent in the previous year.

This is due to the buoyancy in the manufacturing and services sectors, states the CII.

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