{"id":47188,"date":"2025-07-07T20:10:24","date_gmt":"2025-07-07T14:40:24","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=47188"},"modified":"2025-07-11T17:07:35","modified_gmt":"2025-07-11T11:37:35","slug":"invisible-hand-in-india-foreign-trade","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/07-07-2025\/invisible-hand-in-india-foreign-trade","title":{"rendered":"\u2018Invisible Hand\u2019 in India\u2019s Foreign Trade"},"content":{"rendered":"\n<p><strong>Syllabus :GS3\/Economy&nbsp;<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>In News<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India&#8217;s foreign trade dynamics have shifted significantly over the past two decades, with &#8220;invisibles&#8221;\u2014exports of services and remittances from Indians abroad\u2014now playing a more crucial role than physical goods.&nbsp;<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>India\u2019s Service Sector&nbsp;<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India\u2019s services sector covers a wide variety of activities such as trade, hotel and restaurants, transport, storage and communication, financing, insurance, real estate, business services, community, social and personal services, and services associated with construction.<\/li>\n\n\n\n<li>The Economic Survey 2024-25, presented by Finance Minister Nirmala Sitharaman, highlights the service sector as the<strong> \u2018Old War Horse\u2019 of India\u2019s economy,<\/strong> driving growth both domestically and globally.&nbsp;<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Present Status&nbsp;<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Services have consistently supported GDP growth, <strong>contributing around 55% to India\u2019s Gross Value Added (GVA) in FY25<\/strong>, up from 50.6% in FY14.&nbsp;<\/li>\n\n\n\n<li>The sector has maintained an <strong>average growth rate above 6% annually<\/strong> over the past decade, except during the pandemic, with post-pandemic growth accelerating to 8.3%.\u00a0<\/li>\n<\/ul>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full is-resized\"><img data-dominant-color=\"d7d7db\" data-has-transparency=\"false\" loading=\"lazy\" decoding=\"async\" width=\"291\" height=\"291\" src=\"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2025\/07\/Indias-Service-Sector.png\" alt=\"India\u2019s Service Sector\u00a0\" class=\"not-transparent wp-image-47189\" style=\"--dominant-color: #d7d7db; width:321px;height:auto\" srcset=\"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2025\/07\/Indias-Service-Sector.png 291w, https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2025\/07\/Indias-Service-Sector-150x150.png 150w\" sizes=\"auto, (max-width: 291px) 100vw, 291px\" \/><\/figure>\n<\/div>\n\n\n<ul class=\"wp-block-list\">\n<li>It employs about 30% of the workforce and it&nbsp; also boosts manufacturing through \u2018servicification\u2019\u2014the increasing integration of services in industrial processes.<\/li>\n\n\n\n<li>India\u2019s global share in services exports has risen steadily, <strong>now ranking seventh worldwide with 4.3% of the market.<\/strong>&nbsp;<\/li>\n\n\n\n<li>India remained amongst the<strong> top five major countries in terms of growth in services exports in FY25 <\/strong>(April-September).<\/li>\n\n\n\n<li>India\u2019s services export growth <strong>accelerated to 12.8% in April-November FY25<\/strong> <strong>from 5.7% in FY24. <\/strong>Computer services and business services exports account for around 70% of India&#8217;s total services exports.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Potential<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India is a unique emerging market in the globe due to its <strong>unique skills<\/strong> and <strong>competitive advantage<\/strong> created by knowledge-based services.&nbsp;<\/li>\n\n\n\n<li>The Indian services industry, which is supported by numerous government initiatives like smart Cities, clean India, and digital India is fostering an environment that is strengthening the services sector.&nbsp;<\/li>\n\n\n\n<li>The sector has the<strong> potential to open up a multi-trillion-dollar opportunity <\/strong>that might stimulate symbiotic growth for all nations.&nbsp;<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Challenges and Issues&nbsp;<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India\u2019s service sector faces key challenges including infrastructure gaps\u2014especially in digital connectivity and logistics\u2014that limit growth outside urban areas.&nbsp;<\/li>\n\n\n\n<li>There is also a significant skill shortage, with many workers lacking specialized training for high-value services, impacting productivity and innovation.&nbsp;<\/li>\n\n\n\n<li>Regulatory complexities and limited access to global markets further restrict export growth.&nbsp;<\/li>\n\n\n\n<li>It also remains vulnerable to global economic fluctuations.<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-background\" style=\"background-color:#fff2cc\"><tbody><tr><td><strong>Governments efforts\u00a0<\/strong><br>&#8211; The Government of India actively promotes growth in the services sector through various incentives and focused initiatives across key areas like healthcare, tourism, education, IT, banking, and finance.\u00a0<br>&#8211; It has launched an \u2018<strong>Action Plan for Champion Sectors in Services\u2019<\/strong> targeting 12 priority sectors, with tourism expected to generate $50.9 billion by 2028.\u00a0<br>&#8211; The country hosts over 1,000 universities, supporting education and skill development through programs like the Mahatma Gandhi National Fellowship.<br>&#8211; Financial inclusion is strengthened by schemes such as <strong><a href=\"https:\/\/www.nextias.com\/blog\/pradhan-mantri-jan-dhan-yojana-pmjdy\/\" data-type=\"link\" data-id=\"https:\/\/www.nextias.com\/blog\/pradhan-mantri-jan-dhan-yojana-pmjdy\/\">Pradhan Mantri Jan Dhan Yojana<\/a><\/strong>, which has opened over 47 crore bank accounts.\u00a0<br>&#8211; The government also supports manufacturing with production-linked incentives and healthcare infrastructure through missions like <strong>Ayushman Bharat<\/strong> and a planned credit incentive program.\u00a0<br>&#8211; <strong>Foreign direct investment limits<\/strong> in insurance have been raised to encourage investment.\u00a0<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Conclusion and Way Forward&nbsp;<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India\u2019s service sector remains strong and vital for growth and jobs.&nbsp;<\/li>\n\n\n\n<li>India\u2019s <strong>services-led surplus<\/strong> and remittances have kept its overall current account deficit manageable.\n<ul class=\"wp-block-list\">\n<li>This shift underscores India\u2019s emergence as the &#8220;<strong>office of the world,&#8221;<\/strong> driven less by trade in tangible products and more by global flows of intangibles.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>Improving infrastructure, enhancing skills, easing regulations, and boosting global market access can help India realize its full potential and reinforce its role as a global services leader.<\/li>\n<\/ul>\n\n\n\n<p>Source :IE<\/p>\n","protected":false},"excerpt":{"rendered":"<h3><strong>In News<\/strong><\/h3>\n<li class=\"ms-5\">India&#8217;s foreign trade dynamics have shifted significantly over the past two decades, with &#8220;invisibles&#8221;\u2014exports of services and remittances from Indians abroad\u2014now playing a more crucial role than physical goods.\u00a0<\/li>\n<p><\/p>\n<h3><strong>India\u2019s Service Sector\u00a0<\/strong><\/h3>\n<li class=\"ms-5\">India\u2019s services sector covers a wide variety of activities such as trade, hotel and restaurants, transport, storage and communication, financing, insurance, real estate, business services, community, social and personal services, and services associated with construction.<\/li>\n<li class=\"ms-5\">The Economic Survey 2024-25, presented by Finance Minister Nirmala Sitharaman, highlights the service sector as the \u2018Old War Horse\u2019 of India\u2019s economy, driving growth both domestically and globally.\u00a0<\/li>\n<p><a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/07-07-2025\/invisible-hand-in-india-foreign-trade\" class=\"btn btn-primary btn-sm float-end\">Read\u00a0More<\/a><\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-47188","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/47188","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=47188"}],"version-history":[{"count":4,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/47188\/revisions"}],"predecessor-version":[{"id":47714,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/47188\/revisions\/47714"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=47188"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=47188"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=47188"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}