Bengaluru emerged as the undisputed leader in India’s services exports for 2024-25, contributing $78.64 billion, about 35% of the country’s total services exports. Service exports are services that Indian companies provide to customers in other countries and for which India gets paid in foreign exchange. For example, a team in Bengaluru might run cloud infrastructure for a US retailer, design software for an automaker in Europe, analyze financial risk for a bank in the Gulf, or create visual effects for a studio in Asia.
in an interview with The HinduAbhay Sinha, Director General, Services Export Promotion Council (SEPC), the apex trade body under the Ministry of Commerce and Industry of the Government of India that represents and promotes India’s services sector globally, says India’s services exports are led by IT and IT enabled services, with engineering, consulting, AVGC-XR and healthcare growing rapidly.
Where do Bengaluru and Karnataka stand today in terms of services exports?
Karnataka is India’s services-export powerhouse, with Bengaluru as its main engine. India’s services exports rise to a record $387.54 billion in FY2025, a significant jump from the provisional figure of $354.90 billion for April-February 2024-25. As we enter FY26, cumulative services exports for April-August 2025 reached $165.22 billion, showing a strong growth of 10.57%, with September adding $30.82 billion taking the April-September figure to around $196.04 billion.
According to VTPC – Karnataka’s export facilitation arm, the state contributed 41% of India’s services exports in FY 2021-22, valued at $254.4 billion, a baseline that highlights the state’s sustainable external share. According to recent estimates, Karnataka’s services exports will exceed $150 billion in FY2015, which is in line with its national contribution of about 40% in recent years. The economy of Karnataka is completely based on services. The Economic Survey of Karnataka records services at 68.1% of GSVA (2024-25), with Bengaluru being the largest contributor to urban GSDP, which emphasizes why services exports remain heavily concentrated in and around the city, even as the initiative expands to tier-2 and tier-3 hubs.
Karnataka’s talent pool in IT-ITeS, ER&D and consulting provides an inherent competitive advantage, while Global Capability Centers (GCCs) have evolved from cost-savers to innovation hubs, with Karnataka leading the way in India – hosting over 500 GCCs and 35% of the workforce, concentrated in Bengaluru. Pharma giants like AstraZeneca and Eli Lilly run AI-driven R&D. The ‘Beyond Bengaluru’ initiative promotes growth in tier-2 cities, supported by supportive policies for an impact of $50 billion by 2029.
Which sectors mainly contribute to these numbers?
Three major sectors drive Karnataka’s services exports. IT and IT-enabled services (ITES) dominate at the national level, and Karnataka’s contribution focuses on software development, applications and cloud management, cyber security, data engineering and platform site reliability engineering (SRE). Demand primarily originates from the US and EU, with growing demand in the Gulf Cooperation Council (GCC) region and Asia-Pacific (APAC). Bengaluru’s competitive edge stems from its abundant senior engineering talent, strong hyperscale ecosystem and quick adoption of AI-powered delivery models.
Global Capability Centers (GCCs) represent another key area that is being developed under the Karnataka GCC Policy 2024 to emphasize high-value functions such as AI/Machine Learning, product and platform engineering, cyber security, finance operations and R&D. GCCs have moved from back-office support to strategic roles, including product strategy, risk analysis, designing systems and security operations for global headquarters.
The third sector includes engineering, consulting and engineering R&D (ER&D) services, with rapid growth in areas such as energy transition, mobility, digital infrastructure and smart cities.
What are the emerging sectors from Bengaluru and Karnataka?
Karnataka is igniting India’s innovation sector, with Bengaluru at the epicenter, bringing a flood of emerging sectors ready to dominate global markets. This surge is being led by the GCC 2.0/3.0 ecosystem, powered 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 AVGC-XR Policy 3.0 (2024-29), empowering Bengaluru studios to conquer international territories with exported digital masterpieces and real-time 3D wizardry.
Building momentum: Skyrocketing exports in healthcare and tele-diagnostics, engineering R&D consulting, and digital public goods deployment. These juggernauts drive India’s services trade tsunami, which hit a record $341.06 billion in FY 2023-24, positioning Karnataka as the unstoppable engine of tomorrow’s economy.
What challenges do companies face here?
Emerging exporters from Bengaluru are grappling with several constraints that may hamper growth projections.
First, urban hardships are daunting: endless commutes, gridlocked traffic, strained utilities, and a crumbling civic backbone drive up delivery costs and reduce the speed of decision-making. Meanwhile, the struggle for premium office space – scarce and excessive – crushes margins for MSMEs and stifles ambitious expansion, especially as IT giants and the GCC grab the best locations.
Second, wild swings in global demand: While India’s services exports are set to reach $341.06 billion in fiscal 2023-24 — up from $383 billion provisionally in fiscal 2024-25 — customer budget cuts and interest rate turmoil could put the brakes on deals. Survival mantra? Build ironclad buffers to weather storms and diversify across markets.
Third, the compliance maze: international data-protection mandates, sector-specific regulations in finance and health, India’s evolving data laws, and the RBI’s tough annual survey on computer software and ITES exports. For lean organizations without strong legal or finance teams, it’s a paperwork nightmare that drains time and resources.
How are state and central governments helping?
On the Karnataka government side, the GCC Policy 2024-29 combines stringent incentives (for example, rent reimbursement slabs, electricity-duty waivers, patent-fee support) with single-window and explicit clustering ‘beyond Bengaluru’ so that tier-2/3 hubs can host high-value services work; The policy tool-kit and primer are publicly available on the State EIT&BT portal.
In creative technology, the AVGC-XR Policy 2024-29 and its operational guidelines introduce production grants, CoEs and talent pipelines to enhance exportable VFX, gaming and real-time 3D services.
As far as the Government of India is concerned, 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 Center include MAI (Market Access Initiatives) and TIES (Trade Infrastructure for Export Scheme), as well as the Interest Equalization Scheme for Export Credit, an enabler for service firms expanding overseas.
SEPC is the bridge between these policies and victories on the ground. We (i) translate FTP/state-policy intent into curated B2B pipelines and buyer-seller meetings, MAI-supported delegations and multi-party procurement briefings; (ii) Run sector conclaves and playbooks (GCC 2.0, ER&D, AVGC-XR, health/tele-diagnostics) to help companies move from delivery to design-led, IP-rich exports; (iii) To coordinate with Karnataka’s single-window for fast-track set-up in the ‘Beyond Bengaluru’ cluster; and (iv) improve data/compliance preparation so that MSMEs can engage with RBI/MOCI reporting and qualify for scheme support. Our objective is simple: to reduce the cost of internationalization, broaden market access, and ensure that Karnataka’s leadership translates into sustainable, broad-based service-export growth.
