Services could rewrite India's story

Summary: With trade talks stalling and manufacturing faltering, a fresh debate is heating up: Can services—not factories—drive India’s next big leap? A new buzz is building. This story explains why. Trade negotiations with US President Donald Trump have become unexpectedly difficult. There’s still no clarity on what he will do next. The heightened uncertainty is likely to keep investors on edge. This is especially true for sectors where high tariffs have rendered India’s merchandise exports somewhat uncompetitive compared to those from other countries that have managed to negotiate lower tariffs, as well as companies exposed to the changing geopolitics. Alternative trading routes will likely emerge, of course, blunting the blow, and the better-off countries won’t be able to set up new production capacities overnight. Still, until the US and India conclude a durable trade agreement, exports will remain under pressure. Many economists are, therefore, having a change of heart about India’s potential in services, especially tradeable services. Services may be poised to become the hot new narrative. The idea is not new at all. It was made famous some years ago by former Reserve Bank of India Governor Raghuram G Rajan and Rohit Lamba of New York University, Abu Dhabi and Cornell University. The author-economists in their book, ‘Breaking the Mould: India’s Untraveled Path to Prosperity’, argued that the export of services, including high-skilled manufacturing-related services, ought to be central to India’s development strategy. Such a path would be different from the usual succe

This article was originally published on September 01, 2025.