Finance minister Arun Jaitley feels the country has the necessary prerequisites for building advantage in services - a large and growing population, a reservoir of rich and varied human resources and a population which demands quality services.
He maintained that the services sector provided the opportunity to unleash its own energy and foster growth as it is not entirely dependent on availability of quality infrastructure or natural resources. Moreover, it is an area where chartering new territories would also depend on the creativity and imagination of the human mind.
Citing examples of the largest retailer, which has operations worldwide but does not own a single retail store or the largest taxi service which does not own a single vehicle, he said that numerous changes have been happening in the last few years which have made the brick and mortar model less relevant. Similarly, services are expanding in new unchartered areas and new avenues are being opened up in cyberspace eg in education, banking, etc.
According to Jaitley, the major factor coming in the way of realising full potential in services is our narrow mindset which envisions a conspiracy in every step we make towards progress.
Hence, the response is to either delay or stop any progressive move. “No wonder, we fall behind in the world’s competitive battles. This mindset has to be put behind and our aim should be to be a creator rather than the recipient of services. It needs to be realised that sectoral limits on FDI no longer make sense in an era when prohibitions can be breached by technology,” he said.
Jaitley said that the new script that is being written and adopted by countries is the primacy of consumer choice in determining market outcomes.
While China adopted this precept for Manufacturing by producing quality goods at world beating prices, India has adopted the same for services. India has the potential to provide quality services at a fraction of the cost eg hospitals, tourism, smart cities. He said that we have the best hospitals which provide low cost quality services.
“However, we have taken long to liberalise our insurance sector. Similarly, our potential in tourism is constrained by our high cost hotels which are among the costliest in the world due to high taxes which are a deterrent,” he said.
“We need to identify focus areas where we have the potential in the services sector and gear our policies to achieve our goal of delivering world class services,” he said.
To further promote the sector Rajiv Kher, Commerce Secretary, Ministry of Commerce and Industry, stressed on the need for a much more intensive approach to tap the latent potential of several other sectors such as tourism, healthcare, education, legal services etc by pushing for internal reforms in the specific sectors.