some strategy to make india self reloant in terms of exports in service sector , one of the major sector of indian economy and if u want t odownload mail me ur email id and i will sent u the ppt

1. Export­Import Procedure & Documentation
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Introduction
The competitive advantage that India enjoys across a range of sectors has led to rapid
increase in India's exports. Back on the robust 23.88 per cent growth in exports during
2006­07, cumulative value of exports during 2007­08 grew by 23.02 per cent to total US$
155.51 billion as against US$ 126.41 billion in the corresponding period last year.
Spice exports grew by 20 per cent in export volumes in April­May, totalling up to
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98,570 tonnes as against 82,210 tonnes a year back.
Jewellery exports rose 22.27 per cent during 2007­08 compared to the
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corresponding period last fiscal, to reach US$ 20.88 billion.
Automobile Exports grew by 22.30 per cent during 2007­08 over 2006­07, with Two
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Wheelers growing by 32.31 per cent and Commercial Vehicles by 19.10 per cent.
Software and services exports grew by 26.33 per cent to register revenues of US$
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27.49 billion during April­December 2007 as against US$ 21.76 billion during same
period last year. It is estimated that annual exports are likely to grow to US$ 43.89
billion during 2007­08.
Foreign tourist earnings have increased by 30.1 per cent during 2007 to touch US$
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11.62 billion compared to US$ 8.93 billion in 2006. During January­April 2008,
foreign tourists earnings further rose by 28.9 per cent to US$ 4.84 billion.
The new fiscal (2008–09) has continued the robust performance of the economy on the
trade front. Exports have risen by a healthy 31.5 per cent to US$ 14.4 billion during April
2008, as against US$ 10.95 billion during the corresponding period last year. With such
continued buoyancy on the trade front, the Government has set a target of US$ 200 billion
in export earnings for the current fiscal year.
Any item that is sent from India to a foreign destination is an export. Items include
commodities, software or technology, such as clothing, building materials, circuit boards,
automotive parts, blue prints, design plans, retail software packages and technical
information.
example, an item can be sent by regular mail or hand­carried on an airplane. A set of
schematics can be sent via facsimile to a foreign destination, software can be uploaded to
or downloaded from an Internet site, or technology can be transmitted via e­mail or during a
telephone conversation. Regardless of the method used for the transfer, the transaction is
considered an export for export control purposes. An item is also considered an export
even if it is leaving the India temporarily, if it is leaving India but is not for sale, (e.g. a gift) or
if it is going to a wholly­owned Indian subsidiary in a foreign country. Even a foreign­origin

2. Export­Import Procedure & Documentation
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item exported from the India, transmitted or transshipped through the India, or being
returned from the India to its foreign country of origin is considered an export.
Export- Import Bank of
India
Export­Import Bank of India is the premier export finance institution of the country, set up in
1982 under the Export­Import Bank of India Act 1981. Government of India launched the
institution with a mandate, not just to enhance exports from India,
but to integrate the country’s foreign trade and investment with the
overall economic growth. Since its inception, Exim Bank of India
has been both a catalyst and a key player in the promotion of
cross border trade and investment. Commencing operations as a
purveyor of export credit, like other Export Credit Agencies in the
world, Exim Bank of India has, over the period, evolved into an institution that plays a major
role in partnering Indian industries, particularly the Small and Medium Enterprises, in their
globalization efforts, through a wide range of products and services offered at all stages of
the business cycle, starting from import of technology and export product development to
export production, export marketing, pre­shipment and post­shipment and overseas
investment.
Objectives
“… for providing financial assistance to exporters and importers, and for functioning as the
principal financial institution for
coordinating the working of institutions
engaged in financing export and import
of goods and services with a view to
promoting the country’s international
trade…”

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“… shall act on business principles with due regard to public interest”
Service Sector in India
Service Sector in India today accounts for more than half of India's GDP. According to data
for the financial year 2006­2007, the share of services, industry, and agriculture in India's
GDP is 55.1 per cent, 26.4 per cent, and 18.5 per cent respectively. The fact that the
service sector now accounts for more than half the GDP marks a watershed in the evolution
of the Indian economy and takes it closer to the fundamentals of a developed economy.
Services or the tertiary sector of the economy covers a wide gamut of activities like
trading, banking & finance, infotainment, real estate, transportation, security, management
& technical consultancy among several others.
Types
Service industry or service sector includes portions of a country's economy like tourism,
banking, social services, social services and education. Persons working in the service
sector collaborate to do work effectively. Knowledge is utilized to increase workplace
performance and also for corporate sustenance. End product of service industry is advice
(consultancy services), experiences (movies), attention (hospitality industry like hotels and
restaurants), and discussion (interactive TV or radio programs). Examples of service sector
are:
Trade
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Hotels and Restaurants
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Railways
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Other Transport & Storage
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Communication (Post, Telecom)
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Banking
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Insurance
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Dwellings, Real Estate
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Business Services
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Public Administration; Defense
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Personal Services
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Community Services
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Other Services
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There was marked acceleration in services sector growth in the eighties and nineties,
especially in the nineties. While the share of services in India's GDP increased by 21 per
cent points in the 50 years between 1950 and 2000, nearly 40 per cent of that increase was
concentrated in the nineties. While almost all service sectors participated in this boom,
growth was fastest in communications, banking, hotels and restaurants, community
services, trade and business services. One of the reasons for the sudden growth in the
services sector in India in the nineties was the liberalization in the regulatory framework that
gave rise to innovation and higher exports from the services sector.
The boom in the services sector has been relatively jobless. The rise in services share in
GDP has not accompanied by proportionate increase in the sector's share of national
employment. Some economists have also cautioned that service sector growth must be
supported by proportionate growth of the industrial sector; otherwise the service sector
grown will not be sustainable. In the current economic scenario it looks that the boom in the
services sector is here to stay as India is fast emerging as global services hub.
Services industry or sector involves distribution, transport and sale of goods from producer
to consumer. The service sector also includes the supply of a service like entertainment and
cleaning services. Principal characteristic of a service industry is people to people
interaction. Goods, however, may also be transformed when providing a service. For
example, a restaurant cooks the
Food before serving it to customers.
Economic Progression
Country economies tend to progress from agriculture to industry to services. The service
industry is seen to be more opaque to international competition compared to manufacturing.
Nations which undergoes faster economic development have greater labor costs than those
countries lagging behind in the economic development road. This resultant shrinking of
manufacturing in more developed economies force those nations to adopt services as a
leading
employment source.
Problems
Businesses who act as service providers encounter problems unique to the service sector.
Services are intangible and cannot be judged by potential customers before the contract is
completed. For example, efficiency of a mutual fund may only be judged after considerable

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investment of money and time. No guarantees are given for a specific outcome. Branded
firms charge more for the same service.
India ’s Growing Services
Sector
India’s services sector has matured considerably during the last few years and has been
globally recognized for its high growth and development. This sector has been growing at
an annual growth rate of about 28% during the last 5 years. Services exports amounted to a
meager US$ 8.9 billion in 1997 but over the year’s services exports have grown
substantially. There has been rapid growth in the services exports from the year 2002. The
exports have grown up from US $ 19.1 billion to US $ 73 billion in 2006. Presently services
sector account for about 55% of India’s GDP.
India’s share in worldwide service exports is expected to almost triple itself from current 2.3
% to 6 % by 2012, if the present annual growth rate of 28% has been maintained. India’s
global exports of commercial services during the last 10 years can be seen from the table
below –
India’s Global Exports of Commercial Services
US $ (Billion)
Years Exports

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1997 8.9
1998 11.0
1999 14.0
2000 16.0
2001 16.8
2002 19.1
2003 23.1
2004 38.5
2005 68.0
2006 73.0
Strong and consistent emphasis on self­reliance in its economic development programmes
over the years by the Government of India have enabled India to build up a huge and
versatile cadre of professionals with expertise and skills across a vast and wide­ranging
spectrum of disciplines like Health Care, Tourism, Education, Engineering,
Communications, Transportation, Information Technology, Banking, Finance, Management
and a host of others. A sizeable part of this workforce of professionals makes up the
country’s growing consultancy sector which is offering its accumulated experience and
expertise at home and abroad.
A noteworthy feature of India’s consultancy professionals is their capability and capacity to
provide expertise especially suitable for developing countries, in addition to offering
consultancy in sophisticated areas (information technology, advanced financial and banking
services etc.) in developed countries like the USA, UK, France, West Germany and
Australia, Russia and
CIS countries, etc.
FIEO is one of the important service organizations for helping the Indian consultancy firms
engaged in exports. Most of FIEO’s member consultancy organizations are also registered
with international and national consultancy organizations, reflecting the global acceptance
of their high credentials.
Facts
The service sector now accounts for more than half of India's GDP: 51.16 per cent in
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1998­99. This sector has gained at the expense of both the agricultural and industrial
sectors through the 1990s. The rise in the service sector's share in GDP marks a
structural shift in the Indian economy and takes it closer to the fundamentals of a
developed economy (in the developed economies, the industrial and service sectors

7. Export­Import Procedure & Documentation
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contribute a major share in GDP while agriculture accounts for a relatively lower
share).
The service sector's share has grown from 43.69 per cent in 1990­91 to 51.16 per
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cent in 1998­99. In contrast, the industrial sector's share in GDP has declined from
25.38 per cent to 22.01 per cent in 1990­91 and 1998­99 respectively. The
agricultural sector's share has fallen from 30.93 per cent to 26.83 per cent in the
respective years.
Some economists caution that if the service sector bypasses the industrial sector,
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economic growth can be distorted. They say that service sector growth must be
supported by proportionate growth of the industrial sector, otherwise the service
sector grown will not be sustainable. It is true that, in India, the service sector's
contribution in GDP has sharply risen and that of industry has fallen (as shown
above). But, it is equally true that the industrial sector too has grown, and grown
quite impressively through the 1990s (except in 1998­99). Three times between
1993­94 and 1998­99, industry surpassed the growth rate of GDP. Thus, the service
sector has grown at a higher rate than industry which too has grown more or less in
tandem. The rise of the service sector therefore does not distort the economy.
Within the services sector, the share of trade, hotels and restaurants increased from
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12.52 per cent in 1990­91 to 15.68 per cent in 1998­99. The share of transport,
storage and communications has grown from 5.26 per cent to 7.61 per cent in the
years under reference. The share of construction has remained nearly the same
during the period while that of financing, insurance, real estate and business
services has risen from 10.22 per cent to 11.44 per cent.
The fact that the service sector now accounts for more than half the GDP probably
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marks a watershed in the evolution of the Indian economy.
World Trade of Commercial
Services
World commercial services exports rose by 11% to $2.7 trillion in 2006. The expansion rate
of global services trade was basically unchanged from the preceding year and that of the

8. Export­Import Procedure & Documentation
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last six years. Since 2003, commercial services exports expanded less rapidly each year
than merchandise trade.
Among the three broad commercial services categories, transportation, travel and “other
commercial services”, the latter is by far the largest and also the fastest growing category.
In 2006, other commercial services categories expanded by 13% while transportation and
travel services were up by 9% and 7% respectively. In the 1990s, transportation services
expanded less rapidly than travel, but since 2000 the situation has been reversed. The
relatively sluggish growth of travel services can be observed in all major exporting regions
but is most pronounced in North America’s services trade.
Table 1­A
World exports of commercial services trade by major category, 2006
(Billion dollars and percentage change)
Value Annual percentage change
2006 2000­06 2004 2005 2006
Commercial services 2710 10 20 11 11
Transport 626 10 25 12 9
Travel 737 7 18 8 7
Other commercial services 1347 12 19 12 13
Commercial services trade by region is presented in Table 1­B. Europe and North America,
recorded — as in the preceding year — export and import growth below the world average.
Within the European Union services trade developments by member differed widely:
services exports of France and Finland are reported to have declined, while those of
Luxembourg and Poland expanded by one­quarter or more the CIS region reports export
and import growth rates of commercial services of about 20%, the fastest growth of all
regions.
Asia’s commercial services exports continued for the third consecutive year to expand
faster than the global average and faster than the region’s services imports, thereby
reducing the region’s deficit in services trade. Japan, the region’s largest commercial
services trader, increased its commercial services exports by 12% and its imports by 8%.
Among the major Asian traders India continues to excel in terms of its services trade
expansion. While the dynamic growth of India’s commercial — and in particular software
services — exports are widely reported, the dynamic expansion of its services imports
attracts less attention even though the growth rate in 2006 exceeded that of exports.
According to the most recent numbers, India’s commercial services imports are only about
5% short of its commercial services exports.

9. Export­Import Procedure & Documentation
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The commercial services trade of Africa and the Middle East are provisionally estimated to
have expanded close to the world average in 2006. But limitations in data availability could
make these estimates subject to larger revisions than for the estimates provided for other
regions.
The trade performance of the leading commercial services exporter and importer differed
widely in 2006. The shifts in ranking should be interpreted with caution as they might be due
to changes in methodology, and given the incomplete data of major traders, will be subject
to revisions.
On the basis of the preliminary data, it appears that the three top leading traders, namely
the United States, the United Kingdom and Germany, maintained their rank for both exports
and imports. If the export contraction of France’s commercial services is confirmed, Japan
would replace it as the world’s fourth largest services exporter. Italy moved ahead of Spain
to rank as the sixth largest exporter. China’s commercial services exports are estimated to
have surpassed those of the Netherlands and India, entering the group of the top ten
exporters by moving ahead of Hong Kong, China
On the import side, no change occurred among the top ten positions in 2006. According to
the provisional data, India’s imports are estimated to have exceeded slightly those of the
Republic of Korea, even though the latter imports also increased strongly in 2006.
The details of world trade on Commercial Services for 2006 of important countries can be
seen from the Table in the next page. From Middle East and Asia, important countries
trading in commercial services are Israel, Japan, China and India.
Table 1­B
World exports of commercial services by region, 2006
(Billion dollars and percentage)
Exports Imports
Annual percentage
Value nnual percentage change Value change
A
2000­ 2000­
2006 06 2004 2005 2006 2006 06 2004 2005 2006
World 2710 10 20 11 11 2620 10 19 11 10
North America 460 6 13 10 9 401 7 15 9 9
United States 387 6 14 10 9 307 7 16 9 9
South and Central
America a 77 9 16 18 14 80 7 14

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India’s Export of Commercial
Services during the last few years
India’s Global Trade of Commercial Services
US $ (Billion)
Years Exports Imports
1997 8.9 12.3
1998 11.0 14.2
1999 14.0 17.0
2000 16.0 18.9
2001 16.8 19.8
2002 19.1 20.8
2003 23.1 25.5
2004 38.5 38.4
2005 68.0 67.0
2006 73.0 70.0
Issues and Problems
The potential of the services sector for India’s GDP growth, exports and employment being
very high, there is a need to address some issues which need the immediate attention of
policy makers at the highest level. This can facilitate further growth of the sector.
Data Issues in Services
One of the important issues in services sector is the issue of data. Unfortunately, while the
importance of services is growing, statistical data and other relevant information on services
is abysmally low. The word ‘invisibles’ seems very relevant for this sector in the context of
data, as data are invisible or partially visible. Even where data are available, they are not
qualitative and suffer from deficiencies related to definition, method of collection, suitability
for pricing and construction of indices. There are many sectors within the services sector,
and consequently the data collected are also diffused. WTO negotiations are taking place in
151 services and negotiators need statistics as a guide to negotiate specific commitments
in services taking note of India’s export potential. But unlike merchandise trade, in services,

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such data are not available. Leave alone price data, even disaggregate value data, sector­
wise and country­wise are not available. As a result of the recommendations of the
Committees on Services in the Reserve Bank of India (RBI) and Department of Commerce,
a much better set of data is being currently given by RBI. But this is also far from adequate
compared to our needs. Some of the important recommendations of the Services
Committee of the Dept of Commerce, for the National Statistical Commission (Prasad
Committee), related to international trade in services data (see Appendix 1) like sorting out
definitional issues in services, conducting mandatory benchmark and annual surveys,
classifying available data on services under different modes, collecting bilateral trade data
on services, collecting export/import prices of important services, etc, need to be
implemented in a fixed time period. Some recommendations like conducting benchmark
surveys for software services by RBI and rationalizing the classification of services which
has made the share of ‘others’ in the business services smaller are being implemented by
RBI. It is however a matter of concern, that we have a ‘miscellaneous services’ category
which consists among others the most dynamic services like ‘Business services’ which
again has a subcategory of ‘others’. A lot of work needs to be done in the balance of
payments data particularly related to services both in India & internationally, which includes
basic definitional issues, classification issues and even verification of the work done in the
different countries.
Strategies:
Harmonization of accreditation and titles.
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Status of existing Mutual Recognition Agreements (MRAs) and MRAs under which
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countries like India would like to be included.
Removal of limitations like economic needs test, in state residency, citizenship, etc.
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found in national schedules.
Removal of subsidies given by developed members in services like shipping,
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aviation, healthcare, etc. At present WTO negotiations are focused on farm
subsidies. But the subsidies given by developed countries to services are also high.
Extent of quantitative restrictions (QRs) on services, like quantitative limitations on
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setting hospitals, educational institutions, etc.

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Issue of reimbursement of medical expenditure incurred overseas.
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Issue of social security contributions to be made by Indian professionals.
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Issue of the impact of extension of negotiations in maritime services to multi­modal
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transport.
Need to negotiate on trade barriers to services.
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The need for India to emphasize on supply of services not only through temporary
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movement of natural persons and cross border mode, but also by consumption
abroad mode.
Using FTAs/RTAs for coalition building in WTO while complementarities are not lost
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sight of. Developed countries emphasize on improved commitments in mode 3 i.e.
commercial presence so that service suppliers can choose their preferred form of
doing business (e.g. as majority joint ventures, 100% foreign­owned subsidiaries, or
branches). They use the new WTO Accessions and Regional Initiatives for
immediate gains e.g. the strategy for gaining from regional initiatives as in the case
of USA like the Free Trade Areas of the Americas (FTAAs), the Transatlantic
Economic Partnership(TEP) with the European Union, assisting the Japanese
government's efforts in the financial services Big Bang and major capacity­building
component to help African nations, the Everything But Arms (EBA) initiative by
European Community (EC), and the recent Aid for Trade for LDCs initiative by
developed countries.
Need for a special negotiating team for services. Developed countries like US have
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made a head start proactive agenda and the US has set up a Special Services
Negotiating Committee. So, developing countries have to take quick actions, lest
they lose in sectors which they consider to have a potential in future.
Consultation with state governments on issues related to services standards and
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regulations. The US has worked out model schedules or templates for sectors and
held extensive consultations. There is greater involvement of State Governments as
service standards and regulations are established by State Governments or private
professional associations in US.
Removal of Quantitative Restrictions
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Special Economic Zones Scheme
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Reduction of Transaction Cost
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Some General Strategies for India to promote services
exports
Some of the ways in which the Indian government or export promotion agencies can
support service exporters are the following.
Helping service exporters to become known suppliers of quality services and
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providing relevant export market information;
Providing appropriate export financing with reduced transaction costs and reviewing
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the common practice of collateral in the case of services.
Following the Silicon Valley example where Banks securitise the CEOs of
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companies.
Marketing of services with the help of Indian Embassies/Industry associations, etc.
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Anchoring people, particularly, committed specialists, for promoting services.
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Leveraging India's potential purchasing power in services negotiations at multilateral
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and bilateral levels.
Concluding tantalization agreements with target countries to resolve the social
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security benefits issue.
Visa on arrival at least for selected countries.
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Including appropriately issues related to services in Regional Trade Agreements
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(RTAs), Free Trade Agreements (FTAs) and Comprehensive Economic Cooperation
•
Agreement (CECAs).
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Focus on Services in some SEZs.
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Stress should also be on developing front yard technology, in different services and
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not focusing exclusively on the BPO industry coupled with a hardware­software
combination for computer services.
Under the India Development Initiative, Government of India extends Lines of Credit
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to many countries with an aim to enhance India’s economic interests abroad. These

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Lines of Credit are routed through Exim Bank. Though the lines are applicable for all
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items covered under the Foreign Trade Policy, including services, the Government
could consider extending specific dedicated lines focusing on promotion of service
exports from India such as construction services, IT related services and education
services.
Export prospects in services depend on the realities of the past negotiations in WTO
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on services and the ongoing negotiations in services. The export potentialities in
services also influence the negotiating stands of different countries at WTO on
services. With the Doha round of negotiations at a standstill, useful Comprehensive
Economic Cooperation Agreements (CECAs) which include services can help in the
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removal of many market access obstacles if negotiated well and also lead to higher
inflow of foreign investment in services via commercial presence mode.
The absence of a separate service category for outsourcing and the fact that many
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developed countries did not realize the potential of outsourcing when they probably
gave a more liberal commitment for different services under mode 1, highlights the
need for India to make use of the opportunities thrown open by WTO.
Sector-Specific Strategies
for India
India has a good potential for exports of different services, besides software in which it has
already made an impact. While the importance of different modes differ for different
services, with greater tradability of services leading to outsourcing, mode 1 i.e. cross­border
supply mode is assuming greater importance for many services as it can do what can be
done by mode 4, i.e. supply of services through natural persons mode, while avoiding the
disadvantage in this mode related to visas. Some sector specific issues and Strategies for
some services are indicated below.
IT Services

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Strategies for IT services include steps to move to systems software and not merely
application software or Business Process Outsourcing (BPO), negotiating with EU regarding
'Data Protection Act in EU' as half of off­shore work does not come to India and other
countries due to this Act and fully exploiting the great outsourcing revolution in services.
R&D, Design and Engineering Services
The Strategies in the case of R&D, Design and Engineering Services are setting up R&D
labs in SEZs, examining the possibility of cheaper loans taking note of gestation period in
R&D services, patent funding to reimburse costs of patenting, promoting lab testing
services for use of South Asian countries in India, setting up design, engineering,
consultancy parks.
Accounting, Auditing and Bookkeeping Services
In the case of these services where India has a good potential for exports, the limitations
are mainly in the form of licensing, accreditation, in­state residency and state level
restrictions in countries like US. The horizontal limitations on the entry for speciality
occupations, automatically restricts opportunities in this sector. These need to be
addressed and the potential of outsourcing many components of these services has to be
fully tapped.
Unskilled labor Services
A large number of Indians work in the Gulf area mostly as unskilled workers. If they are
trained and skill certified before going abroad, they will get better jobs, earn more and have
higher disposable income, leading to higher GNDI. Countries like Philippines, Thailand and
even Sri Lanka provide such training and skills.
Insurance Services
The Indian insurance sector was opened to private and foreign participation as suggested
in the report of the Committee on Reforms in Insurance Sector (Malhotra committee). As a
result, today there are 16 companies licenced in Life Insurance and 15 in non­life insurance
sectors. Though GIC Re is the only reinsurer operational in India as of now, even this area
is open to entry for foreign and private participation. In the case of Insurance services, there
is the main issue of 26% cap on foreign investment besides restrictions like minimum
capitalization norms, funds of policy holders to be retained within the country, compulsory
exposure to rural and social sectors and backward classes. The regulatory restrictions

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mentioned here are within the purview of Government and Insurance Regulatory &
Development Authority. A consensus is needed in some of these issues to make further
headway
Legal Services
The Advocates Act, 1961 and the Bar Council of India Rules, 1975 are the rules which
regulate the legal services sector in India and the Bar Council constituted under Advocates
Act, acts as the final regulating body. In India, legal services can be provided only by
natural persons who are citizens of India, who are on the rolls of the advocates in the states
where the services are being provided. Some of the current restrictions, which severely limit
the scope of growth in the legal profession, are:­
Partnerships are the only permitted model of practice for law firms in India.
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Further modes of practice such as limited liability partnerships or Limited Liability
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Corporation are not permitted.
Limitation on the number of partners to 20. This limits the growth and size of Indian
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law firms.
Bar on advertising, even having entries in law directories.
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Practice of law is treated as a profession and not an industry resulting in lack of
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finance for lawyers.
Ban on advertising.
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Multidisciplinary practicing firms not allowed
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Education Sector
Some issues in the case of education services are the following:­
While, India needs large investments in the higher education sector, sound
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regulatory framework with transparent rules, stringent accreditation mechanism and
protecting the interests of students are also needed. So a viable financing model,
with a mix of public and private participation has to be put in place. There is also a

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need is to see that Foreign Educational Institutions (FEIs) who may have low stakes
in the overall system and make minimum investments in infrastructure and faculty do
not misuse the system. Instead they should be encouraged to give quality education.
Foreign governments should also be encouraged to fund their Indian campuses for
sensitive, cutting­edge research.
Another issue needing attention is the multiple controls and regulations by the
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central and state governments and statutory bodies.
The regulations with respect to establishment of new medical colleges, patient load
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factors should be reviewed to be in tune with present day equipment intensive
patient care and modern practices and procedures of medical education. Policy
reforms should actively encourage Public Private Partnership (PPP) both in higher
medical education and healthcare. Quality of education and demand supply
mismatch are other issues. Quality of education and demand supply mismatch are
other issues. While a select number of institutions in the country do offer, world­class
education, in most institutions the quality of education is quite unsatisfactory without
a continuous effort to upgrade standards, teaching methods, content of learning, and
the quality of teachers.
There is also a serious mismatch between institutional output and the demand in the
•
market. In some areas there is a surplus, whereas in many others shortages are felt.
There are some serious mismatches between states. For example, there is high
demand for medical and engineering colleges/seats in Delhi. But there are few
medical colleges and new colleges do not come up despite the potential for many
institutions/hospitals to set up medical colleges. Neighbouring states are capitalizing
on this situation. In fact, the higher education system has not yet prepared itself to
meet the new challenges posed by the increase in the pace of liberalization of the
Indian economy and its gradual integration with the world economy. Worldwide there
is a shortage and many countries are taking active measures to import talent. France
has introduced a “Scientist Visa” and Singapore and China are offering a range of
incentives. Countries are also actively encouraging expatriates to return. China is
going through a massive expansion in technical education aimed at creating 100
world class Universities with a growth in Research and Development expenditure
from US$12 billion in 1990 to US$85 billion in 2003.
Tourism Services

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Tourism contributes over 10 per cent of global GDP and its potential in India, given the
country’s enormous natural, human and technological resources, is well­recognized The
sector’s backward and forward linkages, are felt particularly in hotels, restaurants, and
handicrafts. While a recent study by National Council of Applied Economic Research
estimates tourism’s contribution towards GDP (both direct and indirect) in India at only 5.9
per cent, India has already emerged as a very fast growing tourist destination in the world.
Given its bio­diversity, variety of unique destinations and natural locales, India can
transform itself into a 365 days a year destination with increased emphasis on new products
like medical tourism, rural tourism, and wellness tourism, and marketing India as a
destination for Conventions and Exhibitions through a network of India Trade Promotion
Organization (ITPO) like institutions.
Some issues related to Tourism sector include reducing the overall tax impact on tourism
which is around 30­35% in India, and is high compared to other countries, easing barriers
on travel through easy visa on arrival for select countries, establishing a special tourism
police force at important tourist destinations, establishing Budget hotels at identified railway
sites with private sector participation, upgrading airport infrastructure in a time bound
manner, cleaning drives in tourist spots and metros, etc.
Banking Services
The predominance of government ownership in the banking sector is considered to have
led to insufficient competition in the Indian banking system and increased cost of
intermediation. Corporate customers today face a highly competitive environment where
they need to cut costs, maintain quality of products, adhere to international standards and
keep up strict delivery schedules. So banks and FIs have to cut down on the time taken for
project appraisals and disbursements which can possibly be done by promoting within
themselves special appraisal skills meant for specific industries as in the case of the RABO
Bank of Netherlands specializing in financing agro­based and processed foods industries
and capitalizing on the information base built up in the past. In this context, the idea of
setting up a Credit Information Bureau, designed to obtain and share data on borrowers to
facilitate sound credit decisions is a welcome move that can enhance the speed of sound
credit related decisions. Merging of the core competencies of FIs with those of commercial
banks will also bring in the much needed consolidation in the domestic financial sector.
Indian public and private sector banks and FIs have to adopt and imbibe international
norms and practices and strengthen their capital base by mergers and acquisitions before

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launching their operations in the highly mature international financial markets. The
operationalisation of the offshore financial centers can possibly be the first step.
Consultancy Services
Consultancy is another important service sector with promising signs for India. A new
opportunity that is coming up is in the form of offering back office consultancy and sub­
contracting work from foreign consultancies. International accreditation is an important
issue for consultancy and recognition of either CDC or IMCI could help as there would be
proper accreditation which is internationally recognized.
Thus, India’s services sector has many restrictions and removing some of the restrictions
could help in the growth of the different services. However, there is a need to carefully
examine which domestic regulations should continue for achieving socials goals, which
regulations can be removed as a quid pro quo in WTO and bilateral negotiations and which
regulations can be removed voluntarily to facilitate growth and trade in services. Entering
into mutual recognition agreements (MRAs) for the recognition of qualifications, titles &
standards and getting accreditation for Indian institutions in target countries is another area
for focus.
Service Exports
Duty free import facility for service sector having minimum foreign exchange earnings of
Rs.10 lakhs. The duty free entitlement shall be 10% of the average foreign exchange
earned in the preceding three licensing years. However, for hotels, the same shall be 5% of
the average foreign exchange earned in the preceding three licensing years. This
entitlement can be used for import of office equipments, professional equipments, spares
and consumables. However, imports of agriculture and dairy products shall not be allowed
for imports against the entitlement. The entitlement and the goods imported against such
entitlement shall be non­transferable.

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Service sector seeks
government attention
ECONOMIC REFORMS for the past 15 years have mainly focused on the manufacturing
sector. Lately, reforms in the financial sector have received some attention. Regrettably,
neither the service sector nor the agricultural sector has received any serious thought from
the government. Every budgetary proposal has widened the service tax net. But it has given
no sop to this sector, even though it would help tackle our chronic unemployment problem
in a big way. It does beg for the government’s serious attention.
Firstly, experience of many developed countries shows that with increasing urbanization
and after a certain point in economic development, it is the service sector that grows at a
relatively faster pace than either the manufacturing or the agricultural sector. It can be said
that India too has reached a point where its service sector can expect to grow at a relatively
faster pace and needs to be provided with not only all the necessary support but also
perhaps a gentle push. The fact is that this sector is growing at a faster pace than either the
manufacturing or the agricultural sector.
Secondly, it has been observed that this sector generates the greatest number of jobs and
has the capacity to absorb a large labor force, i.e., it has the biggest employment
generation potential. In most of the developed countries, less than 10 per cent of the
population is engaged in agriculture, less than 30 per cent in manufacturing and the rest in
the service sector.
Thirdly, the role of imported inputs like machinery, equipment etc in the service industry is
limited and most of it can be easily procured from within the country for a number of service
sub­sectors. Certain specialized or latest equipment could be imported, if need be, but it will
not be a drain on foreign exchange. Besides, the equipment, once imported will have less
wear and tear compared to the use of equipment in the manufacturing or agricultural sector.
Fourthly, the service sector has high potential of earning foreign exchange, especially in the
tourism sector, like hotels, travel agencies, restaurants, specialized transport of all kinds,
services of guides and so on. In fact, the foreign exchange that imports certain equipment

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to modernize the service industry would be only a small proportion of potential hard
currency earnings.
Service sector expected to
grow more than 9.5 percent
New Delhi: Despite an economic slowdown, India's services sector is expected to grow at
more than 9.5 percent this year, according to the Confederation of Indian Industry (CII). The
CII's projection is based on a survey conducted among services sector chief executive
officers (CEOs). About 66 percent of the services sector CEOs said the industry would grow
above 9.5 percent. About 94 percent of the CEOs expected employment to increase in
health care sector, followed by retail and tourism sectors. About 66 percent of the
participants said employment would increase in IT, IT enabled services (ITES) and telecom
sectors, while 64 percent expected employment to increase in financial services. The major
impediments to growth are global economic slowdown, deceleration in the economy and
shortage of talent and skills, said the survey. The CII snap poll reveals robust services
growth expectation during the current year and supports GDP (gross domestic product)
growth expectation of eight percent plus, CII director general Chandrajit Banerjee said.
Both investment and employment are expected to increase in the services sector despite
pressure on profitability during the current year, Banerjee added. Regarding the investment
expansion for the entire services sector, 87 percent of the CEOs felt that expansion would
continue during the current year. While the growth and investment outlook look healthy, the
margins are expected to be under pressure, the poll said. The main reasons for pressure on
margins are high interest rates, stiff domestic competition, increase in staff costs and stiff
global competition.

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Conclusion
In short the strategy for the services sector should include the following major issues
mentioned above.
Identifying the burdensome domestic regulations in India and reforming them which
•
also include many fiscal issues. Since different services differ in nature, the issues
are varied as given in the indicative examples and involve different institutions,
departments and even governments (central & states), the policy responses will also
differ.
Identifying the different market access barriers to India’s exports of services and
•
focusing on the important ones for negotiations at bilateral and multilateral levels
taking note of India’s domestic growth, export potential of services and import basket
analysis of trading partners. Greater synergy is needed not only between trade
strategies and multilateral/bilateral negotiations, but also between growth and
development strategies and multilateral/bilateral negotiations.
Focus should be on export of untapped services and markets and services with high
•
linkage effects with manufacturing, growth of the economy and employment.
Resolving in a fixed time period, the data and definitional issues in services both in
•
the national accounts and external sector including balance of payments. This will
also involve issues related to prices for services.

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Including services in the inflation index to give a realistic picture of inflation and also
•
in domestic terms of trade to reflect the actual change in distribution of income
between all the three sectors.
All this would involve coordinated strategy and policy making for which a single
•
nodal department/division/institution for services is needed. The above calls for not
only hard and systematic work but also some unconventional decision making at the
highest level.
Acknowledgement
I, Tejas Dinesh Karia, would like to take this opportunity to thank Prof. Shital
Mody for giving us such an interesting topic for our presentation which has
enlightened our knowledge on Export­Import (EXIM) Management.
You have always being a source of inspiration and have always guided me
throughout the assignment. I hope that this will be helpful to me in my near
future.
Thank you madam for all your support provided to me.

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