Regardless of the multilateral agreement, India needs to open up its services sector to enhance competition, efficiency and productivity. In this regard, the country can use the multilateral agreement to increase the pace of domestic reform.
As a member of the WTO, India is actively participating in the Doha Round of services negotiations. These negotiations are extremely important from India's perspective since the services sector is a dominant sector of the economy, accounting for more than 50% of the GDP. India's trade in services has shown an upward trend- from around 20% of the total trade in 1995 to 27% in 2002.1 In 1995, India ranked 34th and 28th among the WTO member countries with regard to the export and import of commercial services respectively. By 2003, India climbed up to the 21st position, both for exports and imports.2 There has been a noticeable change in the composition of the export basket. Over the years, India has carved a niche as an exporter of knowledge-based services such as software and healthcare. The availability of high-skill workers at competitive prices has enabled the country to establish a presence in cross-border supply of various IT-enabled services like back office activities including processing, billing, call centers, medical transcription, legal transcription, tele-medicine, tele-education, and a variety of online and outsourcing services. With increasing financial constraints of the government and the liberalization of the economy, there is a significant need and scope for the inflow of FDI and foreign technical know-how, especially in the infrastructure sector. Thus, the country has both export and import interest in the services sector, which can be addressed in the ongoing round of negotiations. |
