As India marks its 80th Independence Day, services have become almost as important to its export economy as physical goods. The share of services in India’s overall exports rose from 35% in 2009-10 to 48% in FY2025-26, according to data presented by Darpan Jain, Additional Secretary in the Ministry of Commerce and Industry, at a media briefing in Bengaluru on June 9.
Services exports rose from $254.5 billion in FY2021-22 to $421.3 billion in FY2025-26, according to a July 24 Commerce Ministry release based on Reserve Bank of India data. That represents a rise of about 65.5% in four years.
The shift has brought India’s services exports close to merchandise exports. A July 28 Commerce Ministry release said total exports reached a record $863.1 billion in FY 2025-26, including $441.8 billion in merchandise exports and $421.3 billion in services. The gap between the two was just $20.5 billion.
How did India’s services exports grow so rapidly?
India’s services export growth has been building over more than a decade. The Commerce Ministry’s June 9 data showed that services exports grew at a 9.3% compound annual growth rate between FY2014-15 and FY2025-26, compared with 5.7% for overall exports. Jain said the faster growth in services had helped India “structurally offset the overall trade deficit.”
ALSO READRs 1.5 lakh crore lost in fruits & veggies: Can a tax holiday fix India’s cold-storage gap?
The biggest driver has been telecommunications, computer and information services.
Exports from the segment increased from $125.6 billion in FY2021-22 to $206.6 billion in FY2025-26, accounting for 49.03% of India’s total services exports in the latest year.
Business services added another $124.2 billion, or 29.5% of services exports.
Together, the two categories accounted for nearly four-fifths of India’s services exports in FY2025-26.
Unlike merchandise exports, these services do not necessarily require a physical product to cross a border. Software, IT, consulting and other business services can be delivered digitally, while Indian companies can also serve overseas markets through commercial operations and the movement of professionals.
What helped Indian services reach global markets?
The government has increasingly used trade agreements to improve market access for Indian service providers. The Commerce Ministry earlier said recent free trade agreements include provisions covering cross-border services, digital delivery, commercial presence and temporary movement of professionals. Some also seek to make regulatory processes more predictable for Indian service suppliers.
Professional qualifications are another part of the strategy. The government’s data said recent FTAs include provisions for time-bound negotiations on Mutual Recognition Agreements, which can help professional bodies in partner countries recognise each other’s qualifications and licensing requirements.
For Indian professionals, this can reduce the need for duplicate testing, additional training or lengthy re-certification before they can work in another market.
ALSO READFrom Rs 38,000 cr to Rs 4.24 lakh crore: How mobile manufacturing is driving India’s export boom
The government has also negotiated provisions related to social security and taxation. Under the India-UK framework, an agreement on social security contributions was signed on February 10, 2026, while the India-Australia Economic Cooperation and Trade Agreement includes provisions addressing double taxation related to India’s IT services.
The Commerce Ministry has also backed services exports through the Services Export Promotion Council, which works on market development, trade facilitation, policy advocacy, capacity building and buyer-seller engagement.
Services boom does not mean India has stopped exporting goods
Services may now account for nearly half of India’s exports, but merchandise remains a major part of the country’s trade story. Merchandise exports reached a record $441.8 billion in FY 2025-26, slightly ahead of the $421.3 billion services figure.
Engineering goods were the largest category as stated in the Commerce Ministry’s June 9 briefing, with exports reaching an all-time high of $122.4 billion. Electronic goods exports reached $47.96 billion, while pharmaceutical exports stood at $31.1 billion.
Spices crossed $4.3 billion, coffee exports reached $2.1 billion and marine product exports stood at Rs 73,439.91 crore. Electronic goods recorded the highest growth among the sectors highlighted, at 20.3%.
How are trade agreements changing India’s goods exports?
The government has also been using free trade agreements to expand merchandise exports. The June 9 briefing said India had signed nine FTAs with 38 countries over the previous five years.
The July 28 Commerce Ministry release cited the India-UAE Comprehensive Economic Partnership Agreement as one example.
Since the agreement came into force in May 2022, India has issued 4.45 lakh Certificates of Origin. The number of tariff lines exported from India to the UAE increased from 7,546 in FY 2021-22 to 8,053 in FY 2025-26, with exports across those lines valued at $37.3 billion.
Under the India-Australia Economic Cooperation and Trade Agreement, the number of eight-digit tariff lines increased from 5,396 to 5,668 between FY2021-22 and FY2025-26, with exports across those lines valued at $7.2 billion.
The government has also introduced digital tools such as Trade Connect, eCoO 2.0 and the Trade Intelligence and Analytics portal to simplify trade processes and provide exporters with market information.
Jain linked the broader export push to initiatives including Make in India and the Production Linked Incentive scheme, with the government aiming to position India as a global export hub under its Viksit Bharat 2047 vision.
Can services keep driving India’s export growth?
The latest numbers show that services have become a structural part of India’s export economy rather than a temporary growth story. Services exports reached $421.3 billion in FY 2025-26, with telecommunications, computer, and information services alone contributing $206.6 billion. At the same time, merchandise exports reached $441.8 billion.
The longer-term shift is even clearer. Services’ share of India’s overall exports has risen from 35% in 2009-10 to 48% in FY 2025-26, while services exports grew at a faster pace than overall exports over the FY 2014-15 to FY 2025-26 period.
That leaves India with a more diversified export model. India can sell software and business services digitally, while also expanding exports of electronics, engineering products, pharmaceuticals, agricultural goods and other manufactured products.
The transformation is particularly visible in the services numbers.
In FY2021-22, India exported $254.5 billion worth of services. Four years later, the figure had crossed $420 billion.
TOPICSIndependence DayThis article was first uploaded on August fifteen, twenty twenty-six, at zero minutes past five in the morning. © IE Online Media Services (P) Ltd