Software & IT Services: The Backbone of India's Economy

Despite global economic uncertainties, India‘s goods and services exports are on track to reach a new record this year. Earlier this month, Commerce and Industry Minister Piyush Goyal said that total exports could surpass $750 billion for the financial year ending March 31, up from $676 billion in 2021-22.

By the end of January, Indian services exports for the current financial year amounted to $268 billion, according to data supplied by the Department of Commerce, surpassing last year’s total of $254 billion with two months to go. Meanwhile goods exports, which were affected by slowing global demand in recent months, still trailed the full-year total for 2021-22 by 12 percent at the end of January, but year-to-date exports were up 9 percent compared to the same period of the previous financial year.

Driven by its strong software and IT services sector, India is one of the largest services exporters in the world. As the following chart shows, telecommunications, computer and information services were the country’s largest export “good” by a wide margin in financial year 2021-22. Combined with other business services, they accounted for more than 70 percent of services exports and almost 30 percent of total exports that year.

"Since India offers low-cost knowledge-based services, the demand for them has not fallen even amid a global economic slowdown and a negative outlook for the near future," the Indian Ministry of Finance writes in its Economic Survey 2022-23 published in January. This resilience in the face of global economic turmoil explains why India was the fastest-growing major economy in 2022, according to IMF estimates.