The Hindu Business Line : `Indian business services sector needs further reforms'

VIEWING that India was perhaps the only country in the world that took the growth path purely on the wave of its services exports, Prof Geza Feketekuty, President of the Washington DC-based Institute for Trade and Commercial Diplomacy, said there was a need for further liberalisation of reforms in the country.

Prof Feketekuty was here to deliver lecture on `WTO General Agreement on Trade in Services and Improving the GATS Architecture', organised jointly by the ICFAI Institute for Management Teachers (IIMT) and the Indo-American Chamber of Commerce, here on Wednesday.

According to him, services were not an alternative to manufacturing.

On the contrary, business services were the new channels that would be the hallmark of growth in manufacturing. Economic growth based purely on services growth was not the optimal path for India, he said.

Business services such as R&D, data services, design and engineering, business processing, accounting etc. were essential to innovation, increase economic value and productivity, and help economies of scale in the era of globalisation.

Quoting a study on the Indian services sector's contribution to the growth of manufacturing output, he said it went up from about one per cent in the 1980s to about 25 per cent in the 1990s. This had helped the country attract significant foreign direct investment (FDI), witness faster growth and create more employment opportunities, he said.

Prof Feketekuty was of the view that further economic reforms in services sector would expand the range of services India could export. The Indian manufacturers also would get to benefit considerably by accessing the better and wider services to increase their competitiveness in the global markets.

In this regard, he mentioned that the US economy vastly flourished by giving full market access in services sector and treating the foreign services companies on par with the domestic companies. India could emulate such a model to emerge a global player.

Further, Prof Feketekuty highlighted the need for regulation that must be transparent, performance-oriented, encourage adaptation, allow innovation, improve quality and encourage competition.

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