India’s foreign exchange earnings from services and private remittance transfers today exceed that from the ‘visible’ goods exports. These ‘invisibles’ have also remained safe from geopolitics and tariff wars
International trade is normally associated with the movement of physical goods loaded onto ships, whether directly as bulk unpackaged cargo or in standard-sized containers.
But trade isn’t just about the exchange of tangible stuff across national borders through sea and by air. It is also about the global flows of services, people, capital, data and ideas.
In India’s case, the “invisibles” trade – export and import of services plus cross-border private individual money transfers – is today bigger than the “visible” merchandise trade account in its external balance of payments.
Tangibles vs Intangibles
Table 1 shows that India’s exports of goods rose almost five-folds, from $66.3 billion to $318.6 billion, between 2003-04 and 2013-14.
Thereafter, it flattened out and fell to below $300 billion by 2020-21, before registering a significant jump to $429.2 billion in 2021-22 and $456.1 billion in 2022-03. That was basically on the back of a rebound in global economic activity and goods demand after the all-round collapse during the Covid-19 pandemic. The value of world merchandise exports grew by 26.3% in 2021 and 11.7% in 2022, according to UNCTAD (United Nations Trade and Development) data.
But after 2022-23, India’s goods exports have dipped again to $441.4 billion in 2023-24 and $441.8 billion in 2024-25.
On the other hand, the receipts from “invisible” transactions – those not involving export of physical goods – have posted steady, if not impressive, increase over the last two decades and more. In gross terms, these went up nearly 4.5 times between 2003-04 and 2013-14 (from $53.5 billion to $233.6 billion) and by another 2.5 times to $576.5 billion in 2024-25.
In 2013-14, India’s goods exports were about $85 billion more than its receipts from invisibles. In 2024-25, it was the other way round, with invisible receipts roughly $135 billion higher than merchandise exports. While trade deals – including the one now being negotiated with the United States – are mostly focused around seaborne and airborne material cargo, India’s foreign trade story in recent times has had more to do with the exports of intangibles.
Invisible components
A break-up of India’s gross invisible receipts of $576.5 billion in 2024-25 reveals $387.5 billion coming from exports of services, which have soared from a mere $26.9 billion in 2003-04 and $151.8 billion in 2013-14.
The other major source of invisible income has been private transfers or remittances ($135.4 billion). This is money sent by Indians working and living abroad, be it temporarily or as permanent residents and even foreign citizens. The dollars, pounds and dirhams remitted by them is essentially receipts from export of human resources from India.
The rise in private transfers – from $22.2 billion in 2003-04 and $69.6 billion in 2013-14 – is also huge, although not as steep as services exports. The latter has been powered primarily by the exports of software services – from $12.8 billion in 2003-04 to $69.5 billion in 2013-14 and $180.6 billion in 2024-25. Equally important is the export of miscellaneous “business, financial and communication services” – from $37.5 billion in 2013-14 to $118 billion in 2024-25.
Thus, services exports are not only from Information Technology engineers writing software code, but also from accountants, auditors, financial analysts, research & development professionals, management consultants and computer data storage providers.
All these “invisible” exports have seemingly been relatively immune to the vicissitudes of global business cycles, financial crises, pandemics, geopolitical conflicts or tariffs wars. And they have grown with not much government efforts at sealing bilateral trade agreements or unveiling production-linked incentive schemes.
The ongoing India-US trade talks are largely over the Narendra Modi-led government seeking lower tariffs for the country’s exports of textiles, leather, auto components, steel and aluminium products and the Donald Trump administration pushing hard to gain market access for American genetically modified soyabean and corn, ethanol, dairy and other farm produce.
“Invisible” services exports and foreign worker visas aren’t part of the negotiations, at least for now.
The Chinese comparison
Table 2 (above) shows India’s merchandise trade deficit virtually doubling from $147.6 billion in 2013-14 to an all-time-high of $287.2 billion in 2024-25. During the last fiscal ended March 2025, the country’s goods imports, at $729 billion, far exceeded its exports of $441.8 billion.
But the widening goods trade deficits have been considerably offset by surpluses on the net invisible receipts account, surging from $115.3 billion in 2013-14 to $263.8 billion in 2024-25. As a result, the overall current account deficit in India’s balance of payments in 2024-25, at $23.4 billion, was actually lower than the $32.3 billion for 2013-14.
Compare this to China that recorded a merchandise trade surplus of $768 billion in 2024, from goods exports of $3,409 billion versus imports of $2,641 billion. But unlike India, China had a deficit of $344.1 billion on its net invisibles account. That led to a narrowing down of its overall current account surplus to $423.9 billion in 2024.
China, simply put, is the “factory of the world” due to its dominance in global manufacturing. That’s reflected in its running humungous goods trade surpluses year after year. However, when it comes to services, China’s imports in 2024, at $613 billion, were way higher than its corresponding exports of $384 billion.
India, on its part, can lay claim to being the “office of the world”. Its services trade surplus alone was $188.8 billion in 2024-25, with exports at $387.5 billion and imports at $198.7 billion. The large net surplus of $263.8 billion from all “invisible” transactions, including private remittances, is what helped contain its overall current account deficit to a manageable $23.4 billion in 2024-25.
Whichever way one looks at, it is “invisibles” – and not physical movement of goods – that have been the key drivers of India’s foreign trade.
