South backbone for services sector

Southern states contribute 40% of service exports: CII

Southern states have emerged as the backbone of India's edge in services with urban agglomeration of Bangalore alone contributing about 40 per cent of the country's services exports, according to a recent Confederation of Indian Industry (CII) study.

"The urban agglomeration of Bangalore alone contributes about 40 per cent of India's services exports ($8 billion per annum) and about 12 per cent of goods exports ($6 billion per annum)," a CII study on "key factors making India a major global player: the southern stake" noted.

Dynamic clusters with sectoral specialisation like Tirupur exported $800 million worth of goods.

According to the study, cities like Bangalore, Hyderabad and Chennai emerged as growth poles, creating centres of excellence in information technology (IT), biotechnology and pharmaceuticals.

The study said southern states leveraged their traditional strengths in textiles, marine products, gems and jewellery and engineering, while leading the way in producing knowledge workers by creating centres of academic excellence.

Majority of India's H1-B visas were issued to south Indians, the CII said. "Nurture IT, biotech and pharmaceuticals as growth drivers of the economy and expand the niche in services sector and knowledge economy," the study suggested.

The study mentioned that the export-oriented growth strategy in China also centred around growth clusters. Currently, the Shanghai-Suzhou growth pole in China accounts for exports worth $182 billion, roughly three times India's national figures.

The CII study said the southern states were performing well, above the national average in terms of GDP growth. According to the study, to be a major economic power, and substantially reduce poverty by 2010, the roadmap should be to rein in fiscal deficit, though macro indicators are mostly under control.

Steps to reduce the huge transaction costs incurred for doing business in India need to be initiated soon, it said.

The study sought to establish free ports, with world class logistics and making administrative procedures hassle-free. It also called for more investment in agriculture to create effective supply chains and expand value-added food processing industries. The study set a target of increasing India's exports to two per cent of global exports at $178 billion by 2010.

A GDP growth at minimum 10 per cent for the next decade was imperative if India was to emerge as an economic superpower and effectively address the issue of unemployment and poverty. It mooted tariff rationalisation, as per east Asian standards, and liberalisation of consumer good imports.

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High growth

• Cities like Bangalore, Hyderabad and Chennai emerged as growth poles
• Southern states leveraged their traditional strengths in textiles, marine products, gems and jewellery and engineering
• Majority of India's H1-B visas have been issued to south Indians