Bengaluru emerged as the undisputed leader in India’s service exports for 2024-25, contributing $78.64 billion, nearly 35% of the country’s total services exports. Service exports are services that Indian firms deliver to customers in other countries and for which India gets paid in foreign currency. For example, a team in Bengaluru can run cloud infrastructure for a US retailer, design software for an automaker in Europe, analyse financial risk for a bank in the Gulf, or produce visual effects for a studio in Asia.
In an interview with The Hindu, Abhay Sinha, Director General, Services Export Promotion Council (SEPC), the apex trade body under the Ministry of Commerce and Industry, Government of India, which represents and promotes India’s services sector globally, says while India’s services exports are led by IT and IT enabled services, engineering, consulting, AVGC-XR and healthcare are growing quickly.
Where do Bengaluru and Karnataka stand today in terms of service exports?
Karnataka is India’s services-exports powerhouse, with Bengaluru as the main engine. India’s services exports soared to a record $387.54 billion in FY25, a significant leap from the provisional April-February 2024-25 figure of $354.90 billion. As we usher into FY26, cumulative services exports for April-August 2025 hit $165.22 billion, reflecting a robust 10.57% growth, with September adding another $30.82 billion to bring the April-September tally to approximately $196.04 billion.
As per VTPC — Karnataka’s export facilitation arm, the State contributed 41% of India’s services exports in FY2021–22, valued at $254.4 billion, a baseline that highlights the State’s enduring outsized share. Recent estimates peg Karnataka’s services exports at over $150 billion in FY25, aligning with its approximately 40% national contribution in recent years. Karnataka’s economy is profoundly services-driven. The Economic Survey of Karnataka records services at 68.1% of GSVA (2024–25), with Bengaluru Urban as the single largest contributor to GSDP, accentuating why services exports remain heavily concentrated in and around the city, even as initiatives extend to Tier-2 and Tier-3 hubs.
Karnataka’s talent reservoirs in IT-ITES, ER&D, and consulting confer an inherent competitive advantage, while Global Capability Centres (GCCs) have evolved from cost-savers to innovation hubs, with Karnataka leading India — hosting over 500 GCCs and 35% of the workforce, centered in Bengaluru. Pharma giants like AstraZeneca and Eli Lilly drive AI-driven R&D. The ‘Beyond Bengaluru’ initiative fosters growth in Tier-2 cities, backed by supportive policies for $50 billion impact by 2029.
Which sectors primarily contribute to these numbers?
Three key sectors drive Karnataka’s services exports. IT and IT-enabled services (ITES) dominate nationally, and Karnataka’s contributions focus on software development, application and cloud management, cybersecurity, data engineering, and platform site reliability engineering (SRE). Demand originates primarily from the US and EU, with increasing traction in the Gulf Cooperation Council (GCC) region and Asia-Pacific (APAC). Bengaluru’s competitive edge stems from its abundant senior engineering talent, robust hyperscale ecosystems, and accelerated adoption of AI-driven delivery models.
Global Capability Centres (GCCs) represent a second major sector, evolving under the Karnataka GCC Policy 2024 to emphasize high-value functions, such as AI/machine learning, product and platform engineering, cybersecurity, finance operations, and R&D. GCCs have shifted from back-office support to strategic roles, including product strategy, risk analytics, design systems, and security operations for global headquarters.
The third sector encompasses engineering, consulting, and engineering R&D (ER&D) services, with rapid growth in areas like energy transition, mobility, digital infrastructure, and smart cities.
What are the emerging sectors from Bengaluru and Karnataka?
Karnataka is igniting India’s innovation frontier, with Bengaluru at its epicentre, unleashing a torrent of emerging sectors poised to dominate global markets. Spearheading this surge are GCC 2.0/3.0 ecosystems, turbocharged by AI platform operations, cutting-edge analytics, product engineering, and ironclad risk and cybersecurity.
In tandem, AVGC-XR — animation, VFX, gaming, and extended reality — is exploding under the AVGC-XR Policy 3.0 (2024–29), empowering Bengaluru’s studios to conquer international arenas with exported digital masterpieces and real-time 3D wizardry.
Amplifying the momentum: skyrocketing exports in healthcare and tele-diagnostics, engineering R&D consulting, and digital public goods deployment. These juggernauts propel India’s services trade tsunami, which shattered records at $341.06 billion in FY2023–24, cementing Karnataka as the unstoppable engine of tomorrow’s economy.
What challenges do companies here face?
Bengaluru’s booming exporters are battling a trifecta of hurdles that might inhibit the growth projection.
First, the urban grind bites hard: endless commutes, gridlocked traffic, strained utilities, and crumbling civic backbone inflate delivery costs and drag down decision-making speed. Meanwhile, the scramble for premium office space — scarce and sky-high — crushes margins for MSMEs and stalls ambitious expansions, especially as IT giants and GCCs gobble up the best spots.
Second, global demand’s wild rollercoaster: While India’s services exports hit a staggering $341.06 billion in FY2023–24 — provisionally soaring past $383 billion in FY2024-25 — client budget cuts and interest-rate turbulence can slam the brakes on deals. Survival mantra? Forge ironclad buffers and diversify across markets to weather the storms.
Third, the compliance labyrinth: juggling international data-protection mandates, sector-specific regs in finance and health, India’s evolving data laws, and the RBI’s grueling Annual Survey on Computer Software & ITES Exports. For lean outfits without robust legal or finance teams, it’s a paperwork nightmare that devours time and resources
How are the State and Central governments helping?
From the Karnataka government, the GCC Policy 2024–29 combines hard incentives (e.g., rent reimbursement slabs, electricity-duty exemptions, patent-fee support) with a single-window and explicit clusterisation ‘Beyond Bengaluru’ so Tier-2/3 hubs can host high-value services work; the policy tool-kit and primers are publicly available on the State’s EIT&BT portal.
In creative tech, the AVGC-XR Policy 2024–29 plus its operational guidelines lay out production grants, CoEs, and talent pipelines to scale exportable VFX, gaming and real-time 3D services.
As for the Government of India, the Foreign Trade Policy (FTP) 2023 focuses on process re-engineering and automation, district-level export promotion, e-commerce enablement, and easier market access. Press Information Bureau Support schemes highlighted by the Centre include MAI (Market Access Initiatives) and TIES (Trade Infrastructure for Export Scheme), alongside the Interest Equalization Scheme for export credit tangible, enablers for services firms expanding overseas.
SEPC is the bridge between these policies and on-ground wins. We (i) convert FTP/State-policy intent into curated B2B pipelines and buyer–seller meets, MAI-backed delegations, and multi-lateral-procurement briefings; (ii) run sector conclaves and playbooks (GCC 2.0, ER&D, AVGC-XR, health/tele-diagnostics) to help firms move from delivery to design-led, IP-rich exports; (iii) coordinate with Karnataka’s single-window to fast-track set-ups in ‘Beyond Bengaluru’ clusters; and (iv) improve data/compliance readiness so MSMEs can align with RBI/MoCI reporting and qualify for scheme support. Our aim is simple: lower the cost of internationalisation, widen market access, and ensure Karnataka’s leadership translates into durable, broad-based services-export growth.
