Let's prepare well for negotiations on trade in services

India must make the most of its global edge in services via talks to lower barriers that are hard to quantify

- Manoj Pant

Here are some facts. Today, the share of services in global trade stands at about 25%. More importantly, it is the only category of trade that has expanded at a rapid pace since the financial crisis year of 2008. In recent years, the share of goods in trade has fallen by about 5 percentage points and there has been a corresponding increase in the case of services. This pattern is mirrored in India's case. According to the Economic Survey 2024-25, the share of services in terms of export gross value added (GVA) has increased from around 51% in 2014-15 to around 55% now. Further, it is growth in services trade which has kept India's current account deficit (CAD) at a manageable 2% of GDP. It was the General Agreement on Tariffs and Trade (GATT) that led to a decline in global tariffs. Till recently, except some countries in South Asia, import tariffs were in single digits (before Donald Trump took office in the US). And today, international arguments increasingly revolve around non-tariff barriers (NTBs).

It was a stalemate over NTBs at the World Trade Organization (WTO) that led many countries to take recourse to regional trading arrangements to expand their trade over the last two decades. This has the advantage of going beyond the WTO in new areas. One of these is trade in services.

The General Agreement on Trade in Services (GATS) was based on a 'positive list' approach, where countries only need to make offers when they want to. But this has meant very little forward movement here along the lines of commodity trade negotiations under GATT. Another critical holdback is the lack of reliable data.