Home/ News / India/  ‘India to see a decline in service export from May due to Ukraine war’

India’s services exports may be hit from May amid fears that hotel, travel and maritime industries and medical tourism may be severely impacted if the Russia-Ukraine conflict continues, Sunil Talati, chairman, Services Export Promotion Council, said in an interview with Mint. However, services exports will meet the target of $250 billion in 2021-22 and touch $325 billion in the next financial year, he added. Edited excerpts:

Will the Russia-Ukraine crisis impact India’s services sector?

The impact will be seen in the subsequent two months-- from May. Because of rising fuel prices and side effects of the war, there will be a severe impact on four or five sectors such as medical tourism, hotel industry, the travel industry and maritime industry which provide services to importers and exporters. While services exports should not have direct impact of the crises, they have an overall effect as (retail) petrol prices will get impacted and could go up by 20 per litre. All exports and imports are being affected because of the various restrictions laid down by the US and European countries. So, merchandise exports will be severely affected and whenever merchandise exports are affected, the services sector playing a role will be directly hit. The impact could be visible from June and services’ contribution in GDP and service export are likely to come down.

Do you expect any concession in the foreign trade policy (FTP) for the services sector?

The department of commerce has tasked us to identify sectors that require support. So, we are currently working on sector-wise benefits for 12 champion sectors and will soon submit them to the government, which may be incorporated in the FTP, including travel and tourism, education, legal, medical, accounting and finance. The government has asked us to send a report explaining why an incentive should be given, what kind, methodology, checks and balances of claiming of the incentive and a reasonable assurance as to where the exports will reach within five years when the incentives are given.

What level of services exports are you expecting this year and the next?

The target of $250 billion will definitely be surpassed this year. We are forecasting positive growth by March 2023, and it may touch $325 billion based on the feedback that I am getting from the various sub sectors of the services industry. 

Do you see a skill gap?

Better the skill, the higher the exports. But there are issues and challenges in this and we are working on them. 

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Updated: 10 Mar 2022, 06:20 AM IST
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