Explore how India’s booming services sector is quietly redefining growth, earning billions, and challenging the Make in India manufacturing orthodoxy.

India’s Silent Surge: The Moral Imperative of Services Diplomacy

The Paradox of Power

Like a bamboo caught in a storm, India’s economy bends—but refuses to break. For a decade, policymakers have poured resources into “Make in India,” striving to transform India into a global manufacturing hub. Yet, despite muscular diplomacy and production‑linked incentives (PLIs), manufacturing’s share of GDP lingers around 15 percent. The paradox? The most dynamic driver of India’s foreign exchange earnings—its invisible arm—remains sidelined: services exports and remittances. Silence, in this context, is not diplomacy—it is surrender.

Context & Backstory: The Manufacturing Mirage

Ten years after launching its manufacturing crusade, India remains tethered to assembly‑line economics. Smartphones roll off domestic lines, but most components remain imported, making the country a manufacturing assembler, not an integrator. The PLI scheme funneled incentives into electronics, yet core domestic value‑addition remains elusive. Manufacturing’s GDP contribution has barely nudged since 2013–14.

Meanwhile, imports continue to outstrip exports in goods. The current‑account deficit remains stubborn as commodity imports, largely priced in dollars, swell. Yet foreign exchange reserves—crossing $700 billion—tell a different story. How? Enter the services sector—the quiet strategist behind the balance sheet.

The Main Argument: Services as India’s Strategic Ambiguity

India’s services economy exhibits strategic ambiguity: outwardly inconspicuous, yet critical to national resilience. Software, legal, accounting, and financial services—all silently propelling the economy. From 2014–15 to 2023–24, while goods exports rose by 40 percent, services and “invisible receipts” (notably remittances) soared 115 percent. That gap is not an accident; it reflects a policy vacuum. Minister Sitharaman may speak of sunrise sectors—semiconductors, EVs—but state acknowledgment of services is muted at best.

Contrast this with China, the “factory of the world.” China boasts a goods trade surplus of $68 billion in 2024, while services run a $34 billion deficit. Conversely, India leans into invisible incomes—remittances and software exports—offsetting its goods deficits and shoring up foreign reserves. This is not accidental—it’s a deeper expression of economic sovereignty.

IR Theory & Geopolitical Choreography

In international relations terms, India’s double strategy blends realpolitik and normative order. Its manufacturing push is classic power projection; its services diplomacy is a softer, normative assertion of sovereign agency. This is not zero‑sum; it’s a multipolar gambit. Amid US–China rivalry, middle powers like India must wield both muscle and moral leverage. By investing in human capital and digital infrastructure, India crafts a new path of economic independence.

Contrasts and Ironies: Why Are We Blind to Our Strength?

Irony abounds. A sector that yields consistent foreign exchange, fosters remittances from millions abroad, and gives India leverage in global supply chains remains unacknowledged in trade deals and incentives. The free trade talks with the US outline textiles and agriculture, but the silent drivers—tech visas, IT services, diaspora income—are absent. Authoritarian populism in some Western capitals vilifies Indian tech workers, yet India’s own policy remains conspicuously laissez‑faire. Hypocrisy. Irony. Strategic drift?

Moral Undertones: Sovereignty Through Invisible Strength

This omission carries an ethical dimension. Economic sovereignty is not just tariffs and factories—it’s capacity to earn from knowledge, talent, diaspora. It is being financially unchained during global turmoil. The ethos of democratic accountability demands that governments prioritize what truly works, not just grand political gestures. The PLI for chips and e‑vehicles is important. But let’s be real: the soft infrastructure—R&D for AI, legal frameworks for global services, skills development—is just as critical.

The Call to Action: Time for Services‑First Policy

The service sector needs a PLI of its own—“Services‑Linked Incentives.” Legal, financial, digital health, and education exports must have a clear, well‑financed support mechanism. Treat this as a moral and strategic priority—nurture startups, promote skilled migration, deepen diaspora diplomacy. Invest in tech R&D, cyber‑security, and cloud platforms. Make remittance channels leaner, cheaper, and more dignified—as a gesture of respect for migrant contributors to the nation. Support regional hubs in secondary Indian cities, exemplifying multipolar commitment at home.

Global South Stakes & Multipolar Future

ASEAN and African partners watch. India has an opportunity to out‑moral and outperform China—not by replicating hardware—but by exporting soft systems: digital id, e‑governance, fintech, online legal frameworks. Such normative power enhances South–South cooperation, offers alternatives to authoritarian development models, and elevates India’s multipolar branding.

Thought‑Provoking Reflection: Warning or Wake‑Up

The alternative to this service pivot is a stalled economy reliant on volatile global commodity cycles. A generation of skilled youth may face underemployment. Democracy falters where jobs disappear. Sovereignty dims without ean conomic footing. In the end, China’s factory model may produce goods, but India’s intellectual labor remakes sovereignty. Will we amplify it? Or keep drifting?