What is invisible trade? Discuss the salient aspects of India's trade in services.
What is invisible trade? Discuss the salient aspects of India's trade in services.
Invisible trade basically refers to the trading of services. In other words, as services are intangible and cannot be touched or seen, the trade in services is also known as invisible trade. This trade includes services such as travel and tourism, communication and intellectual property rights. In India, the trade in services has been increasing over the years. This can be seen from the following table that depicts the share of three major components (i.e., travel, transportation and insurance) of trade in services in India.
India's Trade in Services (in Rs. Crores)
1960-61
1970-71
1980-81
1990-91
2000-01
2002-03
2004-05
EXPORTS
Foreign travel
15
36
964
2613
16064
15991
18873
Transportation
45
109
361
1765
9364
12261
14958
Insurance
8
12
51
199
1234
1783
1927
IMPORTS
Foreign travel
12
18
90
703
12741
16155
16111
Transportation
25
78
355
1961
16172
15826
10703
Insurance
6
12
34
159
1004
1687
1672
Source: NCERT page-272, Table 11.6
The following conclusions can be drawn from the table above.
(a) The trade in three major services (foreign travel, transportation and insurance) increased significantly during the last four decades. Out of the three, a spectacular increase was witnessed in the export of foreign travel—from Rs. 15 crores in 1960-61 to Rs, 18,873 crores in 2004-05.
(b) The imports of the three services also increased manifold. Major increases were recorded in foreign travel (from Rs.12 crores in 1960-61 to Rs.16,111 crores in 2004-05) and transportation (from Rs. 25 crores in 1960-61 to Rs.10703 crores in 2004-05).
The following table highlights the major components of service exports of India.
Percentage Shares of Major Services in Total Services Exports
Year
Travel
Transportation
Software
Miscellaneous
1995-96
36.9
27.4
10.2
22.9
2000-01
21.5
12.6
39.0
21.3
2001-02
18.3
12.6
44.1
20.3
2002-03
16.0
12.2
46.2
22.4
2003-04
16.5
13.1
48.9
18.7
2010-11
11.5
10.7
41.7
34.2
Source: NCERT page-273, Table 11.7
The following trends can be seen from the table above.
(a) The change in the composition of exports has been phenomenal with a major shift from travel services to software services in the past few years. The software sector, which had only 10.2 per cent share of exports in 1995-96, enjoyed the highest share with 48.9 percent in 2003-04 and 41.7 percent in 2010-11. On the other hand, the share of travel and transportation declined from 64.3 per cent in 1995-96 to 22.2 per cent in 2010-11.
(b) In 2010-11, the share of miscellaneous items increased tremendously to 34.2 percent from 22.9 per cent in 1995-96..
Invisible trade basically refers to the trading of services. In other words, as services are intangible and cannot be touched or seen, the trade in services is also known as invisible trade. This trade includes services such as travel and tourism, communication and intellectual property rights. In India, the trade in services has been increasing over the years. This can be seen from the following table that depicts the share of three major components (i.e., travel, transportation and insurance) of trade in services in India.
India's Trade in Services (in Rs. Crores)
| 1960-61 | 1970-71 | 1980-81 | 1990-91 | 2000-01 | 2002-03 | 2004-05 | |||
| EXPORTS | |||||||||
| Foreign travel | 15 | 36 | 964 | 2613 | 16064 | 15991 | 18873 | ||
| Transportation | 45 | 109 | 361 | 1765 | 9364 | 12261 | 14958 | ||
| Insurance | 8 | 12 | 51 | 199 | 1234 | 1783 | 1927 | ||
| IMPORTS | |||||||||
| Foreign travel | 12 | 18 | 90 | 703 | 12741 | 16155 | 16111 | ||
| Transportation | 25 | 78 | 355 | 1961 | 16172 | 15826 | 10703 | ||
| Insurance | 6 | 12 | 34 | 159 | 1004 | 1687 | 1672 | ||
Source: NCERT page-272, Table 11.6
The following conclusions can be drawn from the table above.
(a) The trade in three major services (foreign travel, transportation and insurance) increased significantly during the last four decades. Out of the three, a spectacular increase was witnessed in the export of foreign travel—from Rs. 15 crores in 1960-61 to Rs, 18,873 crores in 2004-05.
(b) The imports of the three services also increased manifold. Major increases were recorded in foreign travel (from Rs.12 crores in 1960-61 to Rs.16,111 crores in 2004-05) and transportation (from Rs. 25 crores in 1960-61 to Rs.10703 crores in 2004-05).
The following table highlights the major components of service exports of India.
Percentage Shares of Major Services in Total Services Exports
| Year | Travel | Transportation | Software | Miscellaneous |
| 1995-96 | 36.9 | 27.4 | 10.2 | 22.9 |
| 2000-01 | 21.5 | 12.6 | 39.0 | 21.3 |
| 2001-02 | 18.3 | 12.6 | 44.1 | 20.3 |
| 2002-03 | 16.0 | 12.2 | 46.2 | 22.4 |
| 2003-04 | 16.5 | 13.1 | 48.9 | 18.7 |
| 2010-11 | 11.5 | 10.7 | 41.7 | 34.2 |
Source: NCERT page-273, Table 11.7
The following trends can be seen from the table above.
(a) The change in the composition of exports has been phenomenal with a major shift from travel services to software services in the past few years. The software sector, which had only 10.2 per cent share of exports in 1995-96, enjoyed the highest share with 48.9 percent in 2003-04 and 41.7 percent in 2010-11. On the other hand, the share of travel and transportation declined from 64.3 per cent in 1995-96 to 22.2 per cent in 2010-11.
(b) In 2010-11, the share of miscellaneous items increased tremendously to 34.2 percent from 22.9 per cent in 1995-96..
