Invisible hand in India’s foreign trade
Why it Matters?
Invisibles such as services exports and remittances have overtaken merchandise trade as the primary driver of India’s foreign exchange earnings, helping manage the current account despite a rising goods trade deficit.
What You Should Know?
Invisible trade refers to an international transaction which includes services, such as consultancy services, insurance, banking, intellectual property, international tourism, etc.
Invisible trade is one type of Invisibles, which include payments made for services. However, Invisibles could also include remittances, transfer payments, and foreign aid and relief made between individuals, businesses, government, or non-governmental organisations (NGOs).
India’s “invisible” trade (services and remittances) now exceeds its “visible” merchandise exports.
In 2024–25, India’s invisible receipts stood at $576.5 billion, higher than merchandise exports of $441.8 billion.
India’s merchandise trade deficit widened to $287.2 billion in 2024–25.
Net invisible receipts offset this deficit with a surplus of $263.8 billion in 2024–25.
India is seen as the "office of the world" due to its dominance in services exports.
Invisibles, not goods, are now the primary drivers of India’s foreign trade performance.
China posted a massive goods trade surplus of $768 billion in 2024—cementing its status as the “factory of the world.”
China faces a significant deficit in services trade- $344.1 billion net invisibles deficit.