The service industry has the largest share in India’s domestic production. While the Modi government has pursued various policies to grow the manufacturing sector, the role of services industry in the Indian economy still continues. IT sector has been one of the important sources for India’s service sector, but now software, internet services, and e-commerce have emerged as important sectors in India. This means that the services industry in India is undergoing structural changes in recent years. Responding to these structural shifts, many countries start to collaborate with Indian service sector. Yet, the cooperation between South Korea and India is mainly limited to the manufacturing sector. This research on India’s services industry aims to delve deeply into India’s ongoing industrial structural changes and related policies, analyze the changing demands within India’s service sector, and suggest a new direction for South Korea-India collaboration focused on manufacturing.

Based on quantitative and qualitative data analysis of India’s services industry, it is evident that a diverse range of service industries are emerging in India beyond the IT and software sectors. The productivity of Indian service firms and the share of skilled labor are increasing, and there’s a notable structural shift with a significant expansion in the opening up of the service sector to foreign direct investment. India’s service sector generates the most added value within the country, and its job creation is growing significantly compared to other industries. Additionally, there’s been an increase in exports, foreign direct investment, and integration with global supply chains. Traditionally, India’s services industry was dominated by retail and public services. More recently, however, corporate facility management and business support services, including R&D, equipment leasing, data management, and marketing, have emerged as key players. Financial and insurance services and educational services, are also on the rise. Indian domestic companies in retail, telecommunication services, transportation, cultural services, and financial services are experiencing an increase in their average total factor productivity, suggesting that various service domains within India are spearheading the growth of the country’s services industry. Additionally, the proportion of highly skilled workers in India’s service sector is steadily increasing.

At the heart of the growth in India’s services industry is the government’s policy of fostering technology-centric human resources and economic reform policies for the expansion of private sector participation and deregulation. Since its independence in 1947, the Indian government has consistently provided various support measures to cultivate technical workforce. Simultaneously, in 1991, the Indian government embarked on economic reforms centered on a market economy and subsequently opened up service trade and investment. Over time, the government has gradually expanded the scope of permissible FDI, and currently, it allows 100% FDI in most industries, barring a few such as insurance, distribution, and aviation industry. As a result of these measures, demand from abroad surged in the early 1990s to leverage India’s abundant and skilled IT workforce. This was followed by steady economic growth in India, and as individual incomes rose, diverse service industries such as law, accounting, and real estate flourished. Ongoing government support policies in the fields of telecommunications, IT, software, finance, and education continue to propel the growth of various service sectors in India. More recently, rapid growth of the manufacturing sector in India has led to an expansion in the demand for services, influencing the growth of India’s services industry.

However, amidst the structural changes in India’s services industry, South Korea’s integration into the Indian service market appears to be less than that of other major countries. The key external cooperation partners for India’s services industry are centered around the U.S., with other active players including European countries such as the U.K. and Germany, as well as China and Japan. The U.S. collaborates with India on visa facilitation to secure India’s outstanding technical workforce within its borders and is also operating programs for training Indian experts within the U.S. Japan is also cooperating to expand the use of Indian human resources and for Japanese companies to enter the Indian market. Japan, through its digital partnership with India, is promoting cooperation for digital transformation in both nations and supports employment of Indian IT professionals in Japan. In addition, they are strengthening financial technology exchanges and infrastructure cooperation through the Japan-India financial dialogues. Japan is also supporting the joint entry of service companies into India through the creation of industrial complexes. In particular, in Japan’s Neemrana Industrial Zone, various service sectors, including logistics, healthcare, telecommunications, postal services, finance, insurance, and retail, are actively operating alongside manufacturing companies.

In the past, cooperation between South Korea and India has focused primarily on manufacturing. Korean global companies in sectors such as electronics and automobiles are intensifying their expansion into the Indian market. However, in order to strengthen the relationship between South Korea and India, cooperation in various industries, including services, is essential. In particular, India’s service market is considered to have huge potential in terms of size and growth. With the opening up of various service sectors and improving conditions for cooperation, the need for Korea-India service cooperation is high. However, while South Korean investment and exports to India are expanding, the level of services industry cooperation lags behind that of other major cooperation partners. Specifically, in contrast to global investment, which tends to focus on service companies, South Korea’s investment in India’s services industry is characterized by a focus on manufacturing firms. These service investments in India tend to be sporadic and spread across different sectors each year. 

The main reason for the lack of cooperation in services between South Korea and India is the lack of information about the Indian market and the perceived risks involved in both the public and private sectors in South Korea. Useful details about India’s current market conditions, potential, challenges, and entry experiences are not effectively communicated to the Korean public sector or domestic private companies seeking to enter India, leading to heightened risk perceptions and stalled progress in cooperation. This problem has led to the current situation where there is little economic, diplomatic, and cultural familiarity between South Korea and India in both the public and private sectors. On the other hand, Korean companies that ventured into India were drawn by the potential and marketability of the Indian services industry. However, they commonly point to challenges such as differing regulations among Indian states, complicated establishment procedures, lack of highly competitive human resources, and recruitment difficulties due to low awareness of Korean companies in India.

To expand cooperation in the Korea-India services industry, this study emphasizes: ① strengthening the economic and diplomatic ties between South Korea and India at the government level, ② intensifying support for domestic private companies in India, ③ supporting policies that enhance linkages with local domestic manufacturing industries, and ④ the need to expand the exchange of human resources between South Korea and India, as well as encouraging domestic companies to utilize more Indian service personnel. To realize these objectives, this study proposes specific policy tasks such as △ establishing regular dialogue between South Korea and India at the government level, △ creating a Korea-India business support center, △ supporting entry by establishing Korean industrial complex in India, △ developing cooperative projects with public and private participation based on local Indian demand, and △ linking the ODA vocational training programs in India to the domestic labor market. 

국문요약

제1장 서론

1. 연구의 배경과 목적

2. 선행연구와의 차별성

3. 연구의 구성

제2장 인도 서비스 산업 정책 및 환경 분석

1. 인도의 서비스 산업 발전 배경

2. 국내 서비스 산업 지원 정책

3. 서비스 무역 정책

4. 외국인 직접투자(FDI) 정책

5. 국제협력 사례

6. 요약 및 소결

제3장 인도의 서비스 산업 구조 분석

1. 생산

2. 노동시장

3. 무역

4. 투자

5. 글로벌 공급망

6. 요약 및 소결

제4장 인도 서비스 기업 특성 분석

1. 분석 자료

2. 기업 특성 분석

3. 요약 및 소결

제5장 인도 서비스 산업 진출기업 설문조사 및 심층 인터뷰

1. 인도 서비스 산업 진출기업 현황

2. 한국기업 대상 정량 설문조사

3. 진출기업 대상 심층 인터뷰

4. 요약 및 소결

제6장 결론

1. 종합 평가

2. 정책 제언

3. 결론

참고문헌

부록

1. 한국 서비스 산업 기업 대상 온라인 설문지

2. 인도 서비스 산업 진출 다국적기업 및 한국기업 대상 심층 면접조사 질문

3. 심층 면접조사 대상기업 목록(약식)

Executive Summary