India sees sharp decline in IT sector's ability to fund trade deficit

A relatively slower growth in IT Services exports has made India ever more dependent on capital inflows and workers remittances to fund its trade and the overall current account deficit

IT services are India's single biggest export and a key source of foreign exchange. But there has been a sharp decline in the IT industry’s ability to fund India’s fast-growing merchandise trade deficit and current account deficit.

The net export of IT services funded just 30 per cent of India's merchandise trade deficit in July, down sharply from 68 per cent in the year-ago period. 

In the past 10 years, the net export of IT services, on average, has funded 57.5 per cent of India's merchandise trade deficit.

The country’s net IT services export was $9 billion in July this year, up 20