India’s services exports fell marginally by 0.87 per cent to $36.4 billion in September. Ajay Srivastava said, "Any shift or slowdown from these regions drives momentum loss in exports." While monthly figures dipped, exports grew 8.7 per cent to $216.3 billion between April and September 2026, according to government data.
India's services exports in September fell marginally by about 0.87 per cent year-on-year to $36.4 billion signalling slowdown in IT and IT-enabled services, which make up a chunk of the country's services exports. Analysts predict that slowing demand for IT services in the Western world, advancements in AI and the impact of geopolitical shifts on travel and logistics services, could be among key reasons.
India's services exports, however, grew 8.7 per cent YoY to $216.3 billion in April-September 2026, Ministry of Commerce data released on Thursday show. However, the Ministry notes that data for services sector for September are an estimation as RBI, which tracks services exports data, has only put out data till August.
businessline analysis of RBI data on services exports (the latest of which is August) shows that services exports saw a YoY monthly decline before this only in March 2024.
"With the US, EU and UK making up almost 85 per cent of the services exports, any shift or slowdown from these regions drives momentum loss in exports," Ajay Srivastava, founder, Global Trade Research Initiative, said. "The ongoing inflation and elevated interest rates in the US and Europe have led global Fortune 500 clients to slash discretionary IT budgets, defer non-essential digital transformations, and emphasise cost-optimisation contracts," he added.
Simultaneously, advancements in AI tools and automation are also shrinking billing hours and contract sizes across routine software maintenance, and traditional IT-enabled/BPO services, Srivastava said.
Ajay Sahai, Director General & CEO, Federation of Indian Export Organisations (FIEO), told businessline that the decline could be a combination of a high base, IT services slowdown, and impact of geopolitical conflicts on travel and tourism services.
American companies, who are major consumers of India's services, are going through slowdown and all the war-related tensions have made travel and logistics more difficult, he said. "However, given the job scenario, it is good news that merchandise exports, especially the more labour-intensive industries, are doing well," he added.
Another tech analyst said that business services, which mainly comprises global capability centre (GCCs), have also been going slow in expansion in the last few months, and have been prioritising internal productivity led by AI. Similarly, revenue growth of IT majors has also been mute as they grapple with AI-led deflation in contracts and top line with many of them leaning on acquisitions to show inorganic growth, the person added.
Export of services has been on a growth path for India with some analysts also pointing out that they were close to equalling merchandise exports in a few years. Services exports had also touched an all-time high of $421.3 billion in FY26 and were up nearly 9 per cent YoY from $387.5 billion in FY25).
Given this trend, the marginal decline of services exports, comprising IT and IT-enabled services, software, business services, and other exports, is in focus and will be closely watched in coming months.