A constant complaint is that the service sector of the country is not getting the same incentives as the manufacturing sector

As part of boosting services sector exports from the country, the Ministry of Commerce is undertaking a comprehensive overhaul of the Services Exports from India Scheme (SEIS). The Ministry of Commerce intends to provide support to the service sector affected by the pandemic, especially the export operations of education, hospitality, tourism and healthcare. The scheme is expected to be a part of the foreign trade policy which is currently extended for 6 months. The new scheme will exclude the Information Technology (IT) sector from any incentives. The IT sector accounts for the largest share of the country's total service sector exports and is not covered under the purview of SEIS. No incentives have been announced for service sector exports during the last two financial years. SEIS was part of the Foreign Trade Policy of 2015. Although the Foreign Trade Policy has been extended beyond the financial year 2019-20 but the Sadar scheme has not been notified.

Under this scheme, the government used to provide certain types of relief to service sector exporters. Now that the recession in America and Europe is looming, there is a risk of impact on goods exports from India, and there is a growing demand to provide incentive schemes to increase service sector exports. The figure of export of goods from the country is expected to be around 475 billion dollars in the current financial year against 421 billion dollars in the last financial year. Exports of service sector which was 254 billion dollars are estimated to increase to 280 billion dollars. While the barriers to exports of goods are evident, there is a need to increase exports of the services sector to help ease the pressure on the country's trade deficit and current account deficit.

Tourism and hotel industry suffered a big blow during the corona period, especially in the last two financial years. It is essential that not only IT but also health and education should be prioritized in the service sector. For the development of health and education sector, it is seen that sufficient amount of funds have not been allocated for the last several decades. The service sector is becoming the victim of the relief provided to the manufacturing sector. In the era of Corona, the Indian government has talked about a self-reliant India. But efforts are being made to create self-reliance mostly in the manufacturing sector, but not much attention is given to boosting the service sector and increasing its exports. The 14 sectors for which the government has announced to provide production linked incentives are all related to manufacturing operations. These sectors include mobile handsets, autos and auto parts, textiles, white goods and other sectors. Each of these sectors is mostly export oriented.

Despite less incentives than the manufacturing sector, the service sector's share of the country's Gross Domestic Products (GDP) has increased from around 30 percent in 1950 to around 60 percent today. In the service sector PMI report for September, it was stated that the country's service sector activity has fallen to a six-month low. High inflation had a significant impact on demand. A sub-index indicating new business conditions also indicated weakening demand conditions. Demand from overseas for Indian services was the lowest since January.

India needs to be aggressive now to expand trade across borders. India has a strong position in IT and IT enabled services, but the impact of the proposed recession in the US and European countries has started to adversely affect these sectors of India. In such a situation, along with efforts to increase exports in other non-IT business services, service sector exports should also be diversified with emphasis on developing new export products. Instead of focusing only on the export of certain types of services, India needs to take measures to increase the demand abroad for its sectors like education, healthcare and hospitality. During the Corona period, when it became possible to provide services like education at home, efforts to expand the new method of education that has developed by itself, abroad. It can help in increasing the overall exports of the service sector of the country.

The service sector is also receiving support from the government, but there has been a constant complaint of the people associated with this sector that the generous support that is being provided to the agriculture and manufacturing sector is not reflected in the service sector. Despite not receiving special support, the share of the service sector in the country's GDP has increased over the last 75 years compared to the manufacturing sector. India has greatly enjoyed the success of the IT services sector. The overall service sector of the country is a large part of the Indian economy, which has played a major role in sustaining the overall GDP.

Inspite of increase in import duties, schemes like PLI and Self-reliant India, the country's trade deficit is increasing, the main reason for which is the decrease in exports of goods, in such a situation, service sector is a savior for the country in foreign trade, which cannot be ignored.