Speaking at the launch of Champion Services Sector Initiative by Ministry of Commerce and Industry
Respected Hon’ble President of India, Shri Ram Nath Kovind ji, Hon’ble Minister for Commerce and Industry, Shri Suresh Prabhu ji, Hon’ble Chief Minister of Maharashtra, Shri Devendra Fadnavis ji, and members of the audience, it is always a pleasure to attend the GES. I have seen it grow from strength to strength each year – and am extremely happy to see it in aamchi Mumbai this year – the 4th edition that is.
I have been asked to share my vision for our sector and its role in driving services exports in 2-3 minutes. As an industry, a large part of our revenues come from selling ‘airtime’ be it on TV, digital media or radio. Therefore, I understand the importance of every second and will endeavor to limit my address to the stipulated time frame.
If we step back and take a larger view, India’s services exports were ~163Bn USD in fiscal 2017. This was about ~37% of total exports (i.e. including export of goods) – up from ~ 32% in fiscal 2012. If you ask me, aiming for 2x of this number by 2022, seems like a reasonable target to assume – say 320-330 Bn USD of services exports in 5 years. While its extremely difficult to put an exact number on our M&E related exports today – given how we are split up across different sub-sectors such as broadcast, films, digital, VFX, animation etc. I would peg this in the 1.7 Bn USD range – on the aggressive side. We are a 21 Bn USD industry – or thereabouts – meaning 8% of our industry is export revenue. I see this having the potential to go up at least 5x in 5 years – meaning 8.5 Bn USD of export revenue – attributable to M&E alone by 2022. Assuming we touch 35 Bn USD in revenue by 2022 i.e. if there no significant positive disruption, we are looking at exports driving almost a fourth or 25% of our revenue by 2022. This also means that on a total service export base of 163 Bn USD today, we are about 1% whereas by 2022 we would be almost 3% of total services exports.
This was just about the numbers. Simple yet aggressive calculations that encapsulate our status as a fast-growing sunrise sector. I want to however highlight 3 critical nuances about our sector that explain why it can be the next poster-boy – after IT- of our growth in services export.
Job potential: The first nuance is a personal favourite- I’ve shared it before and would like to reiterate it. As most of you are aware, job-creation is a key priority for the government today. A lot has also been accomplished and clearly the government is thinking about the future as well – the reference to Universal Basic Income in the Economic Survey document shows exactly this. India’s total workforce today is around 460Mn-480Mn with 10-15 Mn Indians being added each year to the workforce. As a sector we provide direct employment to 1.1-1.2 Mn Indians. If we add indirect employment and its induced benefits, we are looking at a number of 3.5-4Mn jobs by 2022. We’ll easily generate 1 million more direct jobs by 2022. That means almost 6-6.5 Mn opportunities for total employment by 2022. This number might seem small today but look at the quality of the jobs we will generate. Given their need for creativity, cognitive abilities and high EQ, these will be future-proof jobs. Automation, AI and the like can have only limited impact.
5 years out, I see our sector being the feeder sector for high-quality, automation-proof jobs for other new economy sectors for the whole region – let along the country.
Negligible marginal cost for exports: This is a nuanced nuance. In traditional theory or traditional industries for that matter, we tend to look at the incremental cost for exports – cost of product development/customization, packaging, logistics, maintaining overseas offices etc. Interestingly for our sector, the incremental cost of exporting is negligible in our case – including the opportunity cost. Let me explain. Today, I can take my movie to any corner of the world sitting here in Mumbai and using the reach of a digital platform. Ditto for a song or TV series for that matter. Yes, there are some costs- QC, subtitling, data bandwidth and so on – but nothing too substantial. Overnight, I can’t start making a drama that will be loved by say the citizens of Papua New Guinea – but I can make good dramas for Indian audiences – that might resonate in Papua New Guinea as well! This has an important corollary – while it holds true for other industries as well, it holds even more true for our sector where every almost output is a tradeable item – any domestic public policy aimed at making us competitive in India, will make us competitive across the world. If you ask me, domestic policies are more critical to us than specific ‘export promotion’ measures. Market access for us is a lesser issue. Yes, some countries have quotas – but they also have VPNs that let their citizens enable OTT services (smiles).
Soft power: The last nuance is a one that’s often referred to – I’m talking about our sector’s promise to contribute to our soft power. This has generally been done in the context of geo-politics. Let me throw in an economic dimension. You see, our output – content i.e. has a huge multiplier effect on other service industries such as tourism, travel, healthcare and so on. The more we show of India in our films, the more people want to visit. This multiplier effect must not be under-estimated in our case.
With that ladies and gentlemen, I’d like to conclude my session – in hopefully less than 3 minutes. We have all that it takes to ensure that India takes her rightful place with the next industrial revolution – one that will make human capital, creativity and cognitive ability even more important. From 1% of our services exports today to about 3% by 2022 – and significant, disproportionate upside from the standpoint of India’s labour markets, social policy, economic growth and global standing – that is the promise we hold.
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