Services sector remains India's primary engine of growth

Khaleej Times

a day ago

Question: The manufacturing sector in India has grown marginally in recent months and export of goods has shown a sluggish trend as a result of certain economies slowing down. Will this not affect India's balance of payment position which would have an adverse impact on overall growth estimates for the current financial year?
ANSWER: While it is true that the manufacturing sector in India has not recorded a robust growth rate, the services sector has outperformed and grown at higher rates than any other country. During the financial year ended March 31, 2025, the services sector has contributed almost 60 per cent of the GDP and the export of services from India during this financial year has been at a record high of $387.5 billion. Apart from the growth coming from the IT and IT-enabled services, the share of 'other business services' has gone up dramatically driven by Global Capability Centres which have been set up by multinational companies in different locations of India. It is expected that during the next three financial years the growth in high value services will continue. This will boost discretionary consumption, which in turn will spur manufacturing activity.
Export of manufactured goods will also get a boost from the bilateral trade agreements which India has signed with the major economies, resulting in low tariff exports. Invisible receipts by way of remittances from Indians working in the United States, the Gulf countries and Europe will help India to keep in check its current account deficit. According to data recently released by the Reserve Bank of India, India's total exports comprising goods and services reached an aggregate figure of U.S. $ 824.9 billion in 2024-25.
Question: I want to know whether broking houses in India are permitted to invest in companies which are carrying on non-financial businesses. I am worried that funds of their customers may also be so invested.
ANSWER: Your concern is now addressed by an amendment made last month to the Securities Contracts (Regulation) Rule which allows brokers to use only their own funds to make investments in companies which carry on any type of business. There is an express provision which prohibits stock brokers from using client funds and client securities for such investments.
Before this amendment, stock brokers were not allowed to make investments even out of their own funds in any business other than securities and commodity derivatives. Use of clients' funds and securities were also not permitted for such investments. The amendment to the regulation will now give freedom to brokers to invest their own funds in other businesses. Funds of clients will continue to remain protected and will not be available to brokers for any investment. Further, under the amended regulation, brokers will not be allowed to borrow funds to invest in other businesses. This also ensures that clients of brokers cannot be arm twisted to lend money directly or indirectly to brokers for investments.
Question: My nephew who is in India has secured admission in a well-known institute of hotel management. However, after graduating, he wants to seek employment outside India. Are there prospects for Indian graduates to work in the overseas hospitality industry?
ANSWER: Annually around 20,000 students graduate from institutes of hotel management. According to recruitment firms, overseas demand for such graduates has increased substantially during the last three years. The demand spans the entire spectrum from entry-level roles in front office, F&B services and housekeeping, to mid-level roles in revenue functions. There is tremendous scope for executive chefs as well as in departments like engineering, maintenance and finance. There has been a 35% year-on-year increase in international hiring and the trend has accelerated due to cruise liners having a demand for graduates in the hospitality sector.
The demand has also surged on account of new resort openings in Vietnam, Saudi Arabia, U.A.E. and Maldives. Further, there is a demand from wellness retreats and private estate owners who are seeking professionals from India. Ongoing bilateral collaborations, G2G agreements and talent mobility corridors are making it easier for fresh graduates to access foreign markets. According to international recruitment agencies, Indian hospitality professionals bring strong service skills and cultural adaptability which is responsible for payment of high salaries along with facilities and attractive retirement benefits.
The writer is a practising lawyer, specialising in corporate and fiscal laws of India.