*Dr. Dipankar Sinha
India’s service sector has been a major driving force in the growth of the economy. In 2015, India’s trade in services was valued at $277 billion, with $155 billion worth of export and $122 billion worth of imports. With a share of 3.3 per cent in world export and a share of 2.7 per cent in world imports, India was ranked the 5th largest exporter and 6th largest importer of commercial services.
Compilation of Services Trade Data
Following the entry into force of GATS in 1995, the demand for detailed and comparable statistics on trade in services significantly increased. Several developed countries such as USA, UK etc. have developed a fairly robust system of collection of data on trade in services. These countries have an institutional framework for services trade data collection supported by appropriate regulations, procedures for regular collection of data from administrative sources, regulators and other partner countries (mirror data) and periodic surveys of enterprises engaged in international trade.
Unlike these countries, Indian services trade data is currently based primarily on International Transaction Reporting System (ITRS) in which foreign exchange transactions channelled through banks are reported to the Reserve Bank of India (RBI). The reporting of foreign exchange transactions is mandated under the Foreign Exchange Management Act (FEMA), 1999.
Dissemination of services Trade data & its limitations
The monthly RBI Bulletin provides aggregate level data following the standard classification as stipulated under the IMF’s Balance of Payment Manual, Version 6, for categories like Travel, Transport, Telecommunications, etc. However, information by partner country, by categories and sub-categories of services as prescribed in the negotiating list W/120 and by mode of delivery of services is not available from the RBI data.This severely restricts study and analysis of the impact of liberalization commitments on bilateral trade and pursuing services negotiations with different countries and trading blocks.
Services Trade Data & the Role of Department of Commerce (DoC)
Given the lacunas in the existing framework, the DoC has been working relentlessly to develop a robust framework for collection of statistics on services trade. The following initiatives of the DoC deserve a special mention:
Expert Committee in Central Statistics Office (CSO) & Technical Group on Services in DoC
Amongst the important recommendations made by the Expert Committee and the Technical Group are designating a nodal agency with a mandate to collect, compile and disseminate services trade statistics, integrate some of the data requirements of DoC on external trade in services with the Annual Survey on Services to be launched by CSO, capture information on exporting units in the Sixth Economic Census to be used for conduct of future surveys and undertake more pilot or methodological studies in areas identified for creation of services database.
Implementation of Recommendations of the TG
DoC, on 30th September 2015, designated DGCI&S as the nodal agency to collect, compile and disseminate services trade statistics.
On the request of the DoC, provision was made for collection of some basic information on international trade in services in the 74th Round of NSS survey launched in August 2016.
After the pilots in health and education sectors, several new pilot studies were taken up by DGCI&S with the approval of DoC in sectors like Tourism, Telecommunication, Audiovisual, Logistics, Computer & IT services, Professional services etc. Report of the pilot study on audiovisual, logistics, professional and telecommunication sectors, conducted in partnership with ICRIER was released in June 2016.
Services Trade data for IT, ITeS
Since bulk of IT exporting units are located in STPs and SEZs, arrangements for transmission of data from SEZs to DGCI&S have been put in place to publish quarterly estimates of exports from SEZs from April 2016. A few issues regarding coverage are being sorted out with STPI before the quarterly data on export of IT & ITeS from STPIs can be released.
The code structure for compilation of IT & ITeS data adopted by various stakeholders has also been reviewed in the DoC and a new code structure developed in consultation with DeitY, STPI, NASSCOM and RBI which is likely to be notified by RBI soon for adoption in SOFTEX form.
To promote medical tourism, GOI has a proposal to build up a databank of available resources in the field of medical & wellness services and develop mechanism to disseminate such information.
As a part of this effort, DoC has launched a Medical Tourism survey in June 2016 with a view to collecting information on export earnings/import expenditures by country, distribution of number of non-residents by country of residence and export of health services by discipline. The survey report will be released in April 2017.
With inputs from Bureau of Immigration and the Ministry of Tourism, Indian Statistical Institute (ISI) Kolkata is currently working with DGCI&S on developing a model for generation of quarterly estimates of export earnings from the tourism sector.
Two pilot studies had been conducted by the DoC covering Higher Education services and undergraduate courses. With the survey instruments already in place and the list of institutions which had enrolled foreign students available from the HRD Ministry, preparatory work for launching a pan India survey for this sector is currently in progress.
Strengthening data collection mechanism to reduce non response
Non-response is a serious issue in the successful conduct of any enterprise survey. An appropriate administrative set-up to strengthen the data collection set up of DGCI&S is currently under examination in the DoC in consultation with MOS&PI.
Trade data Classification
Trade negotiators require disaggregated statistics as a guide for future negotiations of specific commitments and for evaluating and monitoring their economic impact in respect of each type of service. CSO in 2010 had developed the National Product Classification for Services Sector (NPCSS) for non transportable goods based on the Central Product Classification (CPC) (Version 2.0) which has been subsequently updated by DGCIS on the basis of CPC Version 2.1 released by UNSD in August 2015. The new Services Classification (NPCSS 2016) has 1277 services instead of 1842 appearing in the previous version of NPCSS. The updated classification will facilitate the category and sub-category-wise data collection in services trade as well as ensure international compatibility.
Enterprise Surveys in Other Sectors
Preparatory work for launching of surveys in other sectors like Logistics, Audiovisual, Professional services as well as the Insurance sector in collaboration with the regulator IRDA is in progress.
The plan of action as envisaged by DoC will help to generate data by services category & trading partner as well as make data available on some of the categories like education and health not covered through ITRS. This data will provide vital inputs for various policy making decisions in the government and meet the long standing demand of researchers and analysts working in the area of services trade.
*Author is an Advisor, Directorate General of Commercial Intelligence and Statistics, M/o Commerce & Industry, Government of India.