India's services exports dip in September as AI, weak Western demand weigh

India's services exports contracted marginally in September, reflecting persistent headwinds across the sector. The decline was driven by a combination of factors, including weakening demand from Western markets, the growing impact of artificial intelligence on traditional IT and software services, and geopolitical disruptions affecting travel and logistics operations.

The IT and software services segment, traditionally a growth engine for India's services exports, showed muted performance amid rapid AI adoption by global clients. This shift is prompting companies to recalibrate their service delivery models and workforce strategies.

Additionally, ongoing geopolitical tensions continue to disrupt international travel and logistics chains, further constraining export momentum. Analysts point to a slowdown in global economic activity as Western markets grapple with uncertainty, reducing demand for Indian service providers across multiple segments.