- Why in news
- On 14 March 2026, PIB published a note on how Union Budget 2026-27 supports India's services exports, which stood at USD 348.4 billion in Apr-Jan FY26.
- What it is
- Services exports are earnings from selling services such as software, business consulting and BPO to foreign buyers. They have become a growing share of India's GDP and a buffer for the external sector. Budget 2026-27 adds tax holidays, safe harbour and APA reforms and skilling measures to grow them.
- Export value
- Services exports are estimated at USD 348.4 billion for April-January FY26.
- Unilateral APA
- A Unilateral APA is an agreement between a taxpayer and CBDT fixing the price of international transactions in advance. The Budget aims to conclude IT services APAs within 2 years.
Don’t confuse with Unilateral vs bilateral APA: A unilateral APA is between a taxpayer and the tax authority of one country. A bilateral APA also involves the other country's tax authority.
Don’t confuse with Safe harbour vs APA: Safe harbour is a pre-set margin accepted by the tax authority without case-by-case review. An APA is a negotiated agreement for a specific taxpayer.
Economy terms and data: 42 Prelims questions since 2013, rising in recent years; they test what a term or instrument means. In Mains, 12 news-triggered questions.
Why it matters
- Services exports act as a buffer for the external sector amid geopolitical disruption.
- The sector provides nearly 30% of employment and added about 40 million jobs in six years.
Problems
- Heavy dependence on software and a few export markets exposes the sector to global demand and visa shocks.
- Services-led growth must create jobs for a wide range of workers, with AI threatening some jobs and skills.
Way forward
- Use trade agreements to widen market access, professional mobility and mutual recognition of qualifications.
- Invest in skilling, AI readiness and digital infrastructure, as the proposed Standing Committee is meant to examine.
Put in your answer
Services share of GDP: Services were 49.9% of India's GDP in 2024, per the World Bank.
GCC hub: India hosts over 1,700 GCCs employing more than 1.9 million professionals as of FY24.
FTA services access: The EU has made commitments across 144 services subsectors in the India-EU FTA.
- 2014Mains GS3 · Q1Reasons for India's services growth over industry; can India develop without industry
- 2014Mains ESSAY · Q4Whether tourism can be India's next big thing
- 2010Prelims Q18Objectives of SEZ Act 2005, including promotion of services exports
- 2020Prelims Q52Whether India's services exports exceed services imports, among other trade statements
UPSC’s own questions that come close to this issue, from our Prelims and Mains banks.
No practice question for this one; the card may still help an answer. Why: Lasting economy topic; tax holiday and safe harbour measures matter, but the release is largely data. Economy terms are 13% of news-linked Prelims questions.
Worth revising until Prelims 2027: most news questions come within two years of the event.