Dynamics of India’s Service Trade: A Constant Market Share Analysis

Vol 10 , Issue 2 , July - December 2023 | Pages: 1-25 | Research Paper

Article has been added to the cart.View Cart (0)

https://doi.org/10.17492/jpi.focus.v10i2.1022301

Published Online: December 15, 2023

Author Details ( * ) denotes Corresponding author

1. * Soumasree Tewari, Assistant Adviser, Department of Economics and Policy Research, Reserve Bank of India, Mumbai, Maharashtra, India (soumasree116@gmail.com)

2. Rajeev Jain, Director, Department of Economic and Policy Research, Reserve Bank of India, Mumbai, Maharashtra, India (rajeevrbi72@gmail.com)

The paper attempts a constant market share analysis to decompose changes in India’s share in global services exports. Our analysis suggests that growth in services exports has been constrained by export market concentrations, lack of product augmentation, concentrated export basket and challenges from increased competition across sectors which do not augur well from the long run perspective. Further, a significant income elasticity both in the short and long run implies that there is a vast potential for India’s services sector to capture the global market with growing demand in certain segments. This is possible with a greater diversification of export basket to capitalise on business opportunities emerging in non-software sectors and build technical resonance and greater market diversification of software exports to further strengthen its global market share.

Keywords

Services Exports; Value Added; Market Share; Elasticity

Ahmadi-Esfahani, F. Z. (2006). Constant market shares analysis: Uses, limitations and prospects. The Australian Journal of Agricultural and Resource Economics, 50, 510-526.
Anand, R., Kochhar, K. & Mishra, S. (2015). Make in India: Which exports can drive the next wave of growth? IMF Working Paper WP/15/119.
Arnold, J. M., Javorcik, B., Lipscomb, M. & Mattoo, A. (2016). Services reform and manufacturing performance: Evidence from India. The Economic Journal, 126(590), 1-39.
Baldwin, R., Forslid, R. & Ito, T. (2015). Unveiling the evolving sources of value added in exports, Joint Research Programme Series No. 161, IDE-JETRO. Retrieved from https://www.ide.go.jp/library/English/Publish/Reports/Jrp/pdf/161.pdf
Bonanno, G. (2016). Constant market share analysis: A note. EERI Research Paper Series, No. 07/2016, Economics and Econometrics Research Institute (EERI), Brussels.
Cattaneo, O., Engman, M., Sáez, S. & Stern, R. M. (2010). Assessing the potential of services trade in developing countries: An overview. International Trade in Services New Trends and Opportunities for Developing Countries, World Bank, 2010.
Das, S. & Sarma, A. (2021). Growth behaviour of India’s export of services, 1975–2018. Foreign Trade Review, 56(3) 301-321. Retrieved from DOI: 10.1177/0015732520982187.
Eichengreen, B. & Gupta, P. (2012). Exports of services: Indian experience in perspective. MPRA Paper No. 37409.
Francois, J., Manchin, M. & Tomberger, P. (2015). Services linkages and the value added content of trade. The World Economy, 38(11), 1631-1649. DOI: 10.1111/twec.12307.
Gilbert, J. (2017). Constant market share analysis: Decomposition of values. Workshop on ‘Enhancing Capacity on Trade Policies and Negotiations in Laos (May 2017). https://www.unescap.org/sites/default/files/07_CMS_I.pdf.
Heuser, C. & Mattoo, A. (2017). Service trade and global value chains. Policy Research Working Paper WPS8126, Development Research Group, World Bank.
Market and Research (2022). Management consulting services-Intelligence report – 2022. Retrieved from https://www.researchandmarkets.com/
Ministry of Commerce and Industry (2006). Report on export promotion of consultancy management services from India. Ministry of Commerce and Industry, Government of India, Press Release, 2006.
NITI Aayog (2021). Report on fast tracking freight in India – A road map for clean and cost-effective goods transport. NITI Aayog, Rocky Mountain Institute (RMI) and RMI India, June 2021.
Pain, N. & Welsum, D. V. (2004). International production relocation and exports of services. OECD Economic Studies No. 38, 2004/1.
RBI (2022). Survey on computer software and information technology- enabled services exports: 2021-22. Reserve Bank of India, Press Release, September 08, 2022.
Sahoo, P., Dash, R.K & Mishra, P. P. (2013). Determinants of India’s services exports. IEG Working Paper No. 333.
Singh, K. (2014). A constant market share analysis of India’s export performance. Foreign Trade Review, 49(2), 141–161.
Thomas, M. P. (2016). Estimation of India’s income and price elasticities of India’s trade in services: Evidence from post-WTO period. South Asia Economic Journal, 17(1), 27–45.
Tyszynski, H. (1951). World trade in manufactured commodities, 1899–1950. The Manchester School of Economic Social Studies 19, 272–304.
UNCTAD (2021). Report on COVID-19 and tourism: An update. Assessing the Economic Consequences.
Veeramani, S. & Anam, (2021). COVID-19 impact on exports of services: Opportunities, challenges and suggestions for India. FIIB Business Review, 10(4), 1-12.
WTO (2023). World trade report. Retrieved from https://www.wto.org/english/res_e/publications_e/wtr23_e.htm.
WTO (2019). Report on futures of services trade. World trade organisation. Retrieved from https://www.wto.org/english/res_e/booksp_e/01_wtr19_0_e.pdf.