service ns manufacturing growth & exports

SERVICE VS MANUFACTURING - the difference it makes


Debate – Recently former governor of reserve bank of india Raghuram rajan expressed the opinion that service led growth fits india well whereas india’s current foreign minister has a diametrically opposite view & opines that it is a flawed strategy and inhibits indias global footprints & India should aspire to become a manufacturing power to achieve its rightful place in global community.

Logic behind supporting service led growth:

  1. services-led export model offers massive potential in reducing inequality in industrial economies and also contributing towards climate action.
  2. services, unlike manufacturing, can be distributed across a country and reduce pressure on megacities that are turning into heat sinks and becoming increasingly unlivable.


Indian position in global service trade:

During 2022-23, the country's services exports rose by 42 per cent to USD 322.72 billion from USD 254 billion in 2021-22, according to provisional data from the commerce ministry, which can rise to USD350. India accounts for just 1.5% of world merchandise exports, Indias standing in global exports in 2022 is presented below:


Top Service Exporting Countries in 2022
Rank Country Exports of services
(in millions USD)
1  United States 795,273 2021
2  United Kingdom 429,928 2021
3  Germany 386,709 2021
4  Ireland 346,680 2021
5  China 338,440 2021
6  France 300,679 2021
7  India 240,655 2021
8  South Korea 229,866 2021
9  Netherlands 191,701 2021
10  Japan 170,029 2021




Policymakers & politicians favour a manufacturing led export growth because it can resolve Indian demand for more jobs, Vast subsidies and tariff protection are offered to attract manufacturing companies to shift from China to India.

Indian position in global merchandise trade:


Country/Territory Region WTO
Exports Year
 World 22,487,000 2021
 China Asia 3,363,959 2021
 European Union[n 3] Europe 2,577,778 2021
 United States Americas 1,754,578 2021
 Germany Europe 1,631,818 2021
 Japan Asia 721,994 2021
 Netherlands Europe 678,400 2021
 Italy Europe 610,285 2021
 France Europe 585,036 2021
 United Kingdom Europe 543,313 2021
 Canada Americas 503,373 2021
 Mexico Americas 494,225 2021
 Russia Europe 494,025 2021
 South Korea Asia 468,055 2021
 Singapore Asia 457,357 2021
 Taiwan Asia 447,693 2021
 India Asia 395,400 2021
 Hong Kong Asia 395,400 2021
 Vietnam Asia 335,929 2021
 Spain Europe 384,459 2021
 Switzerland Europe 379,885 2021
 Australia Oceania 343,594 2021

India's export push

China remains the worlds biggest manufacturer for most of the last decade & exports almost 50% more than the USA the 2nd largest exporter but now this monopoly is being challenged because of the following factors.

  • Rising labour costs in China and
  • Pressure from the Chinese government to transfer technology to Chinese competitors.
  • Bad human rights record.
  • Compliance of paris convention goals.

    Many countries are competing to be the "plus one," with Vietnam, Mexico, Thailand and Malaysia in particular contention. India must still overcome entrenched problems that have kept it a bit player in global supply chains. Its labour force remains mostly poor and unskilled, infrastructure is underdeveloped and the business climate, including regulations, can be burdensome.

Manufacturing remains small relative to the size of India's economy. Nonetheless, after decades of disappointment, it is making progress. Its manufactured exports were barely a tenth of China's in 2021, but they exceeded all other emerging markets except Mexico's and Vietnam's,

The biggest gains have been in electronics, where exports have tripled since 2018 to USD 23 billion in the year through March. India has gone from making 9 per cent of the world's smartphone handsets in 2016 to a projected 19 per cent this year,


Top of page