Statistics reveals that liberalization of the service sector is leading to the bullish growth of the Indian economy. However much of the realization of the full benefit of greater market come from liberalization under General Agreement on Trade in Services (GATS) and depends on how many Indian policy makers could pursue significant domestic reforms in different areas of the economy.

With the initiation of economic reforms in India in 1991 and integration of the economy with the world economy through the multilateral and bilateral trade agreements, services sectors came to play a dominant role in the growth of the Indian economy. Share of services sectors like travel and tourism, transportation, insurance, communication, construction, finance and many others in the country's Gross Domestic Product (GDP) is now almost 54%. India's share in trade in services at present iis slightly higher than 1.40% of the total world trade in services. According to the Federation of Indian Chambers of Commerce and Industry ( FICCI) report, India achieved a substantial breakthrough with service exports recording an astounding 105.7% growth from US$24.9 bn in 2003-04 to US$51.3 bn in 2004-05. Information Technology (IT) and Business Process Outsourcing (BPO) services (software exports also went up by 41.8% to US$17.3 bn in 2004-05) played a major role in this process.

With the negotiations of trade in services under modalities of the General Agreement on Trade in Services (GATS), and formulation of economic cooperation agreements like the South Asian Free Trade Agreement (SAFTA) and the signing of a Free Trade Agreement (FTA) with US, global trade in services is expected to rise. The vastness of the service sector of the country with skilled manpower, India is expected to enjoy a larger pie of the benefit from liberalization of services as estimated by the United Nations Conference on Trade and Development (UNCTAD), India generates US$40-60 bn annually from outsourcing; US$50 bn per year in export of services under mode 4 of the WTO negotiations. Considering the state of growth of the Indian service industry and its future expected potential to generate growth, the extent to which this sector can continue with the present pace of the growth or could accelerate the growth of export is highly sensitive to the level of enhancement of the skill of workers, domestic policy and regulations, liberalization of the various service sectors, level of infrastructural development and finally poverty eradication through generation of productive employment in the economy.

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