Focus sectors for enhancing Indian exports to Australia

Overview of Australia’s imports from the world

Australia’s service imports from the world amounted to USD 65.5 billion in 2018, growing at 6% from 2014 to 2018. In 2018, travel services accounted for majority of the Australian imports with 50% share, followed by transport with 19% share and business services at 13% share¹⁰¹.

Overview of India’s exports to the world

India’s service exports to the world were valued at ~USD 208 billion in 2018, witnessing a growth rate of 7% from 2014 to 2018. In 2018, telecommunication, computer and information services constituted a major portion of the exports at 41% followed by business services at 19%, travel services at 14%, transportation services at 10% and financial services at 4%¹⁰².

India has been a service driven economy for decades and has been able to export its services to developed countries due to its ability to provide cost competitive and quality services. India has particularly witnessed tremendous success in the software services exports due to factors such as favorable Government reforms-establishment of SEZs, availability of a wide pool of engineers at low cost and a large English-speaking young population. These factors have led to the creation of a vibrant Information Technology-Business Process Management (IT-BPM) industry marked by home grown IT giants like Infosys, TCS and Wipro, which have established India’s credibility on the global platform. Software services exports have grown at 9-10% over the last five years and constitute ~75%¹⁰³ of the revenues for the IT- BPM industry in India.

Trade relationship with Australia

The bilateral trade of services between India and Australia grew at 17% CAGR from USD 2.9 billion in 2014 to USD 5.5 billion in 2018. India is the 12th largest exporter of services to Australia and accounts for ~2.7% of Australia’s total services imports from the world. India’s services exports to Australia have increased from ~USD 1.1 billion in 2014 to ~USD 1.7 billion in 2018 by growing at ~12% annually. The growth during 2014 to 2018 has primarily been driven by an increase in computer and information services (16%), travel (13%) and business services (10%). Travel is the most exported service from India to Australia accounting for ~56% of India’s total service exports to Australia in 2018 followed by business services at 23% and computer and information services at 17%¹⁰⁴.

Key opportunities for India

• India accounts for only 2.7% of Australia’s total services imports. The low wallet share indicates a huge room for growth. Further, in few sectors such as business services and travel services, India’s export strength is well aligned with Australia’s import needs, indicating a significant room for growth of Indian service exports to Australia. India needs to analyze the exact nature of Australian service needs and provide differentiated or cost-effective services to increase its exports.
• There is a strong case for enhancing Indian software service exports to Australia due to India’s exceptional expertise in this sector and its low share of ~10% in Australia’s computer and information service imports. India’s IT-BPM (Information Technology-Business Process management) industry body, Nasscom, can identify sector wise needs of computer and information services in Australia and collaborate with IT-BPM companies in India to explore the opportunity.

¹⁰¹ Australian Bureau of Statistics, Cat.5368.0.55.004
¹⁰² Services Trade Data, Ministry of Commerce and Industry
¹⁰³ Nasscom
¹⁰⁴ Reserve Bank Of India