India’s Stand Differs In Services When It Comes In Trade At Global Level; Read Story Here!

Services present a unique picture from agriculture and industrial tariffs from India’s point of view. As an emerging global power in IT and business services, the country is, in fact, a demander within the WTO talks on services because it seeks more liberal commitments on the a part of its trading partners for cross-border supply of services, including the movement of ‘natural persons’ (human beings) to developed countries, or what’s termed as Mode 4 for the provision of services. With reference to Mode 2, which needs consumption of services abroad, India has an offensive interest.

In sharp contrast, the interest of the EU and also the US is more in Mode 3 of supply, which needs the establishment of an advertisement presence in developing countries. Accordingly, requests for more liberal policies on foreign direct investment in sectors like insurance are received.

Unlike many developing countries, India has taken offensive positions during this area because it has export interests in information technology (Mode 1). The country also seeks greater access to the EU and also the US in terms of the movement of natural persons, or what’s termed as Mode 4 in cross-border supply of services.

The lack of movement in Mode 4 thanks to opposition by the US and also the EU may affect India’s ability to supply much in other modes of services.

India's services sector needs to revamp its digital skill and job profile

India would also wish to see issues like economic needs test, portability of insurance and other such barriers in services removed.

As far as delivery of services through commercial presence (Mode 3) is anxious, there’s an increasing trend of Indian companies acquiring assets and opening businesses in foreign markets in sectors like pharmaceuticals, IT, non-conventional energy, etc.

This is often further evidenced by the rise in Outward Foreign Direct Investment. India may, therefore, have some interest in seeking liberalisation in Mode 3, although it should must strike a balance with domestic sensitivities in financial services.

Mutual recognition of degrees, allowing portability of medical insurance, reducing barriers to movement of execs, etc, are a number of the areas of interest to India.

Service Sector in India | Growth of Service Sector | Deloitte India

An important issue referring to the delivery of services and liberalisation is domestic regulatory reforms. Appropriate domestic regulations are necessary to stop market failure also on address issues like internal control, accreditation and equivalence, effective registration and certification systems, distribution, etc, for shielding and informing consumers. additionally, regulatory frameworks can even advance transparency.

Any market access commitments that India might make during the continued negotiations must be preceded by an efficient regulatory framework. The hiatus within the negotiations may well be utilised for putting into place appropriate regulatory regimes in numerous service sectors.

Future of Service Sector in India

Some experts are of the view that under the Uruguay Round commitments, developed countries have already got a liberal trade regime in Mode 1 (which covers Business Processing Outsourcing or BPOs) with relevance a number of the service sectors of interest to India.

Further research has to done to assess the extent of autonomous liberalisation undertaken by developed countries, which might be locked in during the negotiations, and consequent gains that may accrue to India.

Further, even within the absence of additional liberalisation, India’s service exports would still grow visible of its cost advantage and demography. India could also explore the likelihood of finalizing mutual recognition agreements with the most importers of services, in order that differences in national regulatory systems don’t act as barriers to its exports.