India’s services exports, especially computer services, are showing remarkable growth, according to Franziska Ohnsorge, Chief Economist for South Asia at the World Bank. Speaking at the Kautilya Economic Forum in New Delhi, she said that services have become a strong attraction for foreign investors, thanks to India’s readiness in artificial intelligence adoption, according to an ANI report.
Computer services exports have grown by 30 per cent since November 2022, when AI tools like ChatGPT were introduced. In comparison, overall services exports have risen only by 10 per cent in the same period. Ohnsorge pointed out that this growth indicates clear opportunities for global businesses looking at India as a key player in the technology-driven economy.
Manufacturing held back by trade barriers
While services exports are thriving, India’s manufacturing exports face hurdles. Ohnsorge said high tariffs on intermediate goods and a limited number of trade agreements have slowed the sector’s expansion. India is currently negotiating Free Trade Agreements with the UK, EU, Canada, Oman, and several Indo-Pacific partners, which could open new markets for Indian manufacturers.
She added that private investment in India, though slower than before the pandemic, is still stronger than in most emerging economies. However, foreign direct investment remains a weak spot, with India’s FDI-to-GDP ratio in the bottom quartile globally, as per the ANI report.
The economist stressed that removing trade barriers, finalising FTAs, and attracting higher FDI are crucial if India wants to fully unlock its export potential and compete strongly on the global stage.