Services industry going bullish: CII

New Delhi: The services industry in India sees seven to eight percent growth in July-December on expectations of new projects, repeat orders and expansion plans, an industry study reveals.

"The services sector expects a growth between seven and eight percent from July-December and has major expansion plans," the Confederation of Indian Industry (CII) said in a report released on Sunday.

The first Services Sector Business Outlook Survey conducted by the CII says 92 percent companies are planning investments of over Rs 10 million ($222,000) during the six-month period and 28 per cent plan investments of Rs 50 million ($1 million) and above.

Better sales, new projects, repeat orders and customers and billing rates are driving the positive outlook with as many as 60 per cent indicating that they are moving up the value chain.

A whopping 83 per cent voted new customers as the reason for the positive business outlook. The survey include companies engaged in business, communication, construction and related engineering services, distribution, education, environment, finance, health, tourism and travel, recreation, culture and sports.

With the services sector contributing 54 percent to India's economic growth, the positive outlook has led 83 percent respondents to expect a corresponding growth in employment opportunities.

"Things look bright on the export front as well," according to the survey. An 81 percent of the respondents expect a rise in the value of exports, with new customers and billing rates during July-December adding to the optimism.

However, respondents feel that constraints on the movement of natural persons (by many of the countries) would remain unchanged, states CII.

One third of the respondents felt the constraints on the movement of natural persons may increase during the next six months and have called for measures to mitigate existing restrictions on such movement.

India and several developing countries have been pursuing the matter of greater freedom in the movement of people for employment through the World Trade Organisation (WTO) negotiations.

The CII survey says the service industry is also upbeat about the economy. More than half (54 per cent) the respondents expect the GDP to grow at over 8.0 per cent during 2006-07.

This reflects its performance during the first quarter of the current financial year when it grew at 8.9 per cent compared to 8.5 per cent in the previous year.

This is due to the buoyancy in the manufacturing and services sectors, states the CII.