A new era of digital dominance in Asia has arrived as India has emerged as a major player in the digital service sector, outpacing China with a significant increase in digitally delivered services. According to the latest Global Trade Outlook and Statistics report by the World Trade Organisation (WTO), India’s exports of digitally delivered services reached a staggering $257 billion in 2023, marking a 17% increase from the previous year. This growth rate significantly outpaced that of China and Germany, both of which saw a modest 4% increase. India’s robust performance has propelled it to become the world’s fourth-largest exporter of digitally delivered services. This shift is not only reshaping the economic dynamics of Asia but also positioning India as a global leader in the digital economy.
What Led to this Impressive Growth?
India’s rapid adoption of cutting-edge technologies, such as artificial intelligence (AI), machine learning and blockchain, has been a game-changer. These technologies have not only enhanced the efficiency and quality of digital services but have also made India a preferred destination for outsourcing and digital solutions. The Indian government’s proactive policies and initiatives, such as the Digital India campaign and the Make in India initiative, have further bolstered this growth, creating a conducive environment for the digital economy to thrive. These initiatives have attracted significant foreign investment and encouraged homegrown startups to innovate and expand.
India’s large pool of highly skilled IT professionals and engineers is a key factor behind this remarkable growth. Their expertise and dedication have been instrumental in India’s digital dominance. The country’s focus on STEM (Science, Technology, Engineering and Mathematics) education has ensured a steady supply of talent capable of driving the digital services sector. Moreover, the country has significantly invested in digital infrastructure, including high-speed internet connectivity and data centres, which has facilitated the seamless delivery of digital services. The widespread adoption of digital payment systems, such as the Unified Payments Interface (UPI), has further boosted the digital economy.
India vs. China: A Comparative Analysis
While China remains a dominant player in the global digital economy, India’s recent performance in digital service exports has been noteworthy. In 2023, China’s digital services exports grew by 4%, reaching approximately $381 billion. Although China’s absolute value remains higher, India’s growth rate and strategic advancements indicate a shifting balance in the digital services landscape.
In 2023, India’s business, professional, and technical services sector accounted for 41.2% of the world’s exports of digitally delivered services. While India’s IT industry continues to be a powerhouse, representing 20.5% of global digital service exports, India’s intellectual property-related services account for 10.9% of global exports, while financial services account for 16%.
The rapid adoption of AI and other emerging technologies has been a cornerstone of India’s digital services growth. AI models capable of generating content, such as text, images, music, and videos, have revolutionised various aspects of the economy. These technologies have led to increased efficiency, innovation, cost savings, and personalisation opportunities, further boosting trade in digitally delivered services.
India’s digital services sector is poised for continued growth. The WTO anticipates improvements in the global economy and trade, with a projected 2.6% increase in the volume of world merchandise trade in 2024. India’s strategic investments in digital infrastructure, its skilled workforce, and supportive government policies position it well to capitalise on these opportunities.
The remarkable growth in India’s digital services exports spotlights India’s emergence as a global leader in the digital economy. India has demonstrated its ability to innovate, adapt, and thrive in the digital age by outpacing China and other major economies. As technological advancements continue to reshape the global trade landscape, India’s digital services sector is set to play a vital role in driving economic growth and encouraging global connectivity.
