Determinants of India’s Services Trade: Sectoral Analysis in a Gravity Framework

This study offers a comprehensive examination of India’s bilateral services exports at a disaggregated sectoral level, covering 12 service sectors and 180 partner countries during 2005–2021. Using the OECD-WTO BaTiS data set within a gravity framework, it identifies the trends and factors driving India’s services exports. We augment the analysis by calculating gravity-based, sector-specific ad valorem estimates of non-tariff barriers imposed by partner countries. Our findings suggest that the United States, the United Kingdom, Singapore, the Netherlands and Germany impose the least barriers on Indian services. Gravity results indicate that, unlike in goods trade, geographical distance has a weaker and less-robust effect on service flows, while linguistic ties play a more important role. India’s services exports are typically higher than countries with which it has strong goods–trade relationships, but trade agreements do not significantly boost services exports. Sector-specific factors—mobile cellular penetration for telecom, shipping connectivity for transport and R&D share in GDP for other business services—also emerge as significant. By conducting a sectoral analysis for a large set of partner countries, the study contributes novel empirical evidence to an underexplored dimension of trade from a major emerging economy perspective. JEL Codes: F14, F13, L80