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"Thanks to the phenomenal growth of ITES, Karnataka is emerging the epicentre of the service sector, which also offers employment opportunities, next only to farming."

BANGALORE, Aug 27

THE Centre is framing a mid-term export strategy for services on the lines of its strategy for commodities last year, according to Dr H.A.C.Prasad, Economic Adviser, Union Ministry of Commerce and Industry.

The services sector will be extended the same kind of incentives and support that the commodities have been offered. It would eventually be included in ASIDE, the export-linked aid scheme for States, Dr Prasad told a seminar on service exports here today.

The Commerce Ministry has begun surveys to gather data on the services sector and is in consultations with exporters, the Exim Bank and related bodies for their feedback before the policy is readied in the coming months.

At a time when the mandated general agreement on trade in services (GATS ) negotiations were going on at the WTO , Dr Prasad said the Ministry did not have data on the sector either at the national level or the State-level. "There are no two opinions about the importance of services sector in the world or in India." The country can surpass its export doubling and FDI targets only through this sector, which contributes some 53 per cent of the GDP, he said.

The Ministry is seeking inputs such as the export potential by type of service and destination; obstacles to these services in India or abroad; comparative policy initiatives of other countries; linkages with commodity sector and the basic estimates for the next five years.

On the WTO front, the developing world is pressing for its rights on all the four modes of services, while India has an edge on the movement of professionals, which faces several invisible barriers in the West.

While there was a tremendous potential for India in IT, ITES, telecom, areas like ship maintenance, lab testing, quality assurance, education, super-specialty hospitals remained untapped and India would have to quickly seize the advantage, he said.

The Karnataka Minister for Large & Medium Industries, Mr R.V. Deshpande, said with services accounting for around 76 per cent of the State exports, Karnataka was planning a special policy for this neglected sector.

Thanks to the phenomenal growth of ITES, Karnataka, he said, was emerging the epicentre of the service sector, which also offered employment opportunities, next only to farming. Even in a sluggish year like 2001, services export from the State grew 25 per cent to touch Rs 20,000 crore, Mr Deshpande said.

However, service-dominated States like Karnataka, Maharashtra and Andhra Pradesh would be affected as exports in this sector are not considered for infrastructure development aid under ASIDE. The Karnataka Government had written to the Centre to include services also as a measure of export performance, he said.

Canara Bank CMD, Mr R.V. Shastri, said in line with the Exim Policy, the bank planned to set up a couple of overseas business units for further push on the services side.

The seminar was organised by the Federation of Karnataka Chambers of Commerce & Industry and the Union Commerce Ministry.

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