India's services exports slip in September as IT growth slows with AI

Picture India's software engineers, call centre teams and designers as one giant shop that sells work to the world. For years, that shop has sold more almost every single month. In September 2026, it sold a little less. India's services exports fell about 0.87% from a year earlier to $36.4 billion, according to estimates in government data released on Thursday, 15 October 2026.

That is a tiny drop. But it is rare. A businessline check of RBI data found that services exports had fallen in a month, compared with the same month a year before, only once before this: in March 2024. So people are paying attention.

Wait, how do you export a service?

When most people hear "exports", they think of ships full of rice, phones or cars. Those are goods. You can hold them, pack them and put them in a container.

A service is different. It is work, not a thing. Think of a tuition teacher in Pune who teaches a student in London over a video call. Nothing gets packed. Nothing goes on a ship. But money comes from London to Pune. That is a services export.

India sells a lot of this kind of work. Indian IT companies write and fix software for banks and shops in the US and Europe. Teams in India answer customer calls, check bills and run computer systems for firms far away. Tourists who visit India and spend money here also count, and so does transport and travel work.

Four cards light up one by one: a client abroad needs work, a team in India does it, the work travels online, and dollars come back to India — A services export in four simple steps

The numbers, in plain words

The Ministry of Commerce and Industry put the value of services exports for September at $36.35 billion, against $36.67 billion in September 2025. That gap is $0.32 billion. On a total this large, it is like a cricket team scoring 363 runs instead of 367.

There is one catch. These September figures are only an estimate. The Reserve Bank of India (RBI) is the one that tracks services exports, and it had only put out data up to August when the ministry made its estimate. So the final number could still change.

And August itself looked strong. RBI data showed services exports in August 2026 rose 13.7% to $35.47 billion. That makes the September dip feel like a sudden brake.

Zoom out to six months and the picture is still healthy. From April to September 2026, services exports were an estimated $216.31 billion, against $199.02 billion a year earlier. That is growth of about 8.7%.

A number counts up to $216.3 billion while six bars rise, one for each month from April to September 2026 — Month by month, the six-month total still kept growing

Why did IT work slow down?

Experts quoted by businessline gave three big reasons.

1. Big clients are spending less. Ajay Srivastava, founder of the Global Trade Research Initiative, pointed out that the US, EU and UK make up almost eighty five per cent of India's services exports. He said high prices and high interest rates there have pushed large companies to cut spending on IT projects that are nice to have but not urgent. Interest rate means the cost of borrowing money. When borrowing is costly, companies hold back, just like a family skips a holiday when loan EMIs go up.

2. AI is doing some of the work. Srivastava also said AI tools and automation are shrinking billing hours and contract sizes in routine software upkeep and call centre style work. Billing hours are the hours a company charges a client for. If a tool can do in one hour what a team did in five, the client pays for fewer hours. It is like a samosa stall buying a machine that folds samosas. More samosas, but fewer paid helpers.

Another tech analyst told the paper that big Indian IT companies have seen slow revenue growth as AI cuts the value of contracts, and that global capability centres (GCCs) have been slow to expand too. A GCC is an office that a foreign company runs in India to do its own work, like a big bank's tech team sitting in Bengaluru.

3. A high base and travel trouble. Ajay Sahai, Director General and CEO of the Federation of Indian Export Organisations (FIEO), said the dip could come from a high base, an IT slowdown and conflicts hurting travel and tourism. A high base means last year's number was already big, so beating it is harder. If you scored 95 in last year's exam, scoring 94 this year feels like a fall, even though it is still great.

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Meanwhile, goods had a great month

Here is the twist. In the same month, India's goods exports had a very good run. A separate Edock story looked at how merchandise exports jumped 23% in September, so here is just the short version.

Goods exports rose 23.04% to $44.40 billion, up from $36.08 billion a year earlier. Add goods and services together and India's total exports came to an estimated $80.75 billion, up 10.99%.

Check the sum: $44.40 billion of goods plus $36.35 billion of services is $80.75 billion. It matches.

Look at last September too. Then, services ($36.67 billion) were a bit bigger than goods ($36.08 billion). This September, goods pulled clearly ahead. Commerce Secretary Rajesh Agrawal told reporters that merchandise shipments were driving the strong export growth.

Three bars grow: services in September 2025 at $36.67 billion, services in September 2026 at $36.35 billion in vermilion, and goods in September 2026 at $44.40 billion — Services dipped a little while goods jumped

Even so, India still sells far more services than it buys. The services trade surplus, which is what India earns from selling services minus what it pays for buying them, was $102.71 billion for April to September 2026, up from $98.77 billion a year earlier.

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Should anyone worry?

One month is not a trend. Services exports touched an all time high of $421.3 billion in FY26, up nearly 9% from $387.5 billion in FY25. Some analysts had even said services exports could come close to goods exports in a few years.

That is why this small dip is being watched closely. The same data release showed goods trade growing fast, so the bigger question is about the services side: is AI changing how much the world pays India for brain work?

For students eyeing a career in IT, this is a story worth following. The experts above point to AI cutting the hours clients pay for in routine work, while demand from big Western clients has cooled. When the RBI publishes its own September figure, it will show whether this was a one month blip or the start of something bigger.

Sources

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