Raghuram Rajan: Focus on the export of services to drive India’s economic growth
To drive growth, India could focus on the export of services provided by its well-educated and skilled population. Though this cohort represents a small fraction of the total population, it still numbers in the tens of millions. Such a strategy would build on India’s strengths.
The country is already well known for its role in the global software industry, and now it exports many other services, too, accounting for over 5% of the world’s services exports while its goods exports account for less than 2%. Multinational firms—from Goldman Sachs to Rolls-Royce—are hiring talented Indian graduates for India-based global capability centres (GCCs), where engineers, architects, consultants and lawyers create designs, contracts and content (and software) that are embedded in manufactured goods and services sold globally. These centres already account for over 50% of all GCCs globally, employing 1.66 million Indians and generating $46 billion in annual revenues as of March 2023.
Following the pandemic-induced changes in work habits, and given improvements in communications technology, Indians also have started providing a much wider range of remote services, including consulting, telemedicine and even yoga instruction. Once a service goes virtual, it matters little whether the provider is ten miles or 10,000 miles away. An Indian consultant in Hyderabad can now make a presentation to a client in Seattle on behalf of a team whose members span almost every continent.
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