The Government is taking a spate of decisions to promote services sector exports from India and to enhance India’s share in the US$ 4 trillion global services trade.
Inaugurating the Services Conclave jointly organized by Ministry of Commerce and Industry and CII in the capital today for the first time, Mr Anand Sharma, Union Minister for Commerce and Industry concurred with the CII suggestion that a joint task force for the Services Sector to be set up to provide an institutional framework for creating new ideations and action blue prints fort the development of the sector. The proposed body will have representatives of the Government, industry and other stakeholders.
Another suggestion of CII to have a National Services Competitive Council on the lines of National Manufacturing Competitive Council was agreed upon by the minister in principle. “ We have to have forum to address the varied needs of the sector and to identify training and other needs of each vertical,” the minister remarked.
A third important suggestion put forward by CII to institutionalize the Services Conclave and to hold it annually was found acceptance by the Commerce Minister. “This will help intensifying the government and industry interactions, which can lead to many positive steps and results,” the Minister observed.
The Minister said that the services sector exports, by and large, are from verticals like IT, ITeS and BPO sectors However, there is scope for tapping exports from other segments of services sector like animation, media and entertainment, legal servicing, architecture, healthcare, tourism and medical tourism etc. In this regard, he observed that industry should come forward along with the government, to take up at the highest level of multilateral forums the need for movement of skilled persons under mode 4 under WTO rules. Often, he said that movement of skilled persons is confused with immigration, though such movements are temporary in nature.
Referring to the Free Trade Agreement signed by India with countries like ASEAN, South Korea and such agreements in the pipeline like Malaysia, the Commerce Minister said that such agreements not only cover merchandise trade but services also. With the conclusion of these agreements, there will be scope for services sector exports as well, he added. There will be great demand for skilled professionals particularly doctors, nurses, paramedical staff etc. in many countries as a result of such agreements.
Calling for industry’s support for addressing the visa issues such as increase in the visa fee and restrictive policies followed by some European countries in granting visa to professionals, Mr. Sharma observed that a combined effort would have its impact.
The Minister underscored many grey areas in the services sector which need to be addressed to. Some of the segments in services sector such as IT and ITEs, telecom, etc have regulators and strong institutional frameworks to promote these segments. But there are no regulatory bodies for vast number of services segments. It is important that industry identify such areas and such verticals where regulatory mechanisms can play an important role.
Referring to the constraints being faced by the services sector exports, the Minister said that like in the case of merchandise exports, there is high transaction cost on account of lack of infrastructure, higher turned around time, higher delivery time etc. There is a wide horizon of services and each vertical has to be looked at in depth to know the problems, prospects and for taking ameliorative measures.
Mr S R Rao, Union Commerce Secretary, referred to the non-tariff barriers that were affecting the services trade from the country. A few select sectors in professional services like financial services, accountancy, management consultancy are doing quite well. But there is a need for identifying other segments and encouraging them to develop. He also mentioned that technology could be leveraged to promote services exports. For this, it si imperative to have quality hubs could provide best services be it service audio visual exports, medical health tourism etc. He also underscored the need for collaborative effort between industry and the government and the need for identifying multiple stakeholders in the sector.
Mr Sunil Kant Munjal, Past President CII, underscored the need for partnership between Government, industry and society in promoting services trade in the country. He wanted sharp focus on tourism and medical tourism which not only could generate more exports but also employment. Laying emphasis on education and vocational training as a facilitator of services sector in the country, he said that at high school level there should be focus on vocational training. India also should become cost competitive. In the given situation, it is necessary to debate whether high salary structure which has come to rule the country since 2009 should be addressed to. Also, there should be enabling structures for promoting competition and value addition to the services exports in terms of design and engineering inputs.
Mr Malvinder Singh, Chairman, CII Services Council, said that SME sector should be given importance in promoting services trade in the country. Also, there should be a proactive FDI policy that can gel well with India’s need in the services sector. Referring to the need for promoting healthcare, hotel and restaurant and banking sectors, he said that these segments can employ a large number of people besides contributing to exports.