Small Service Enterprises Need Government’s Interventions

Abstract

The services sector around the world has emerged as the dominant segment of the economy, substantially contributing to its Gross Domestic Product (GDP), and has become a major foreign exchange earner by exporting services. The international trade in services shot up by 77 per cent to USD 5.5 trillion in a span of five years from 2001. World trade in services accounted for over 20 per cent of the trade in merchandise, amounting to USD 24 trillion in 2006'. Consistent with the international trend, the Indian service sector has grown in importance, and has diversified too, over the years. Its share in GDP has been increasing year-by-year and stood at 54 per cent in 2005-06, up from 41 per cent in 1990-91. While the share of industry hovered around 25 per cent, agriculture witnessed a 12- percentage point drop to 20 per cent during the same timeframe* 2. The micro, small and medium service enterprises (MSMSEs) too have been making their contribution to this ever-increasing share of services in GDP, though large players of major services overshadow that. One would find small enterprise in almost all major services such as communications (courier, subscribers/ international trunk dialing —STD/ISD), tourism- related (tours and travels), transport (repair & services of motor vehicles, movement of goods -freight forwarding), entertainment (cable network for TVs) and trade (retail and wholesale).