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Tourism and Hospitality

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Tourism and Hospitality

July, 2011

Tourism is a significant sector of the Indian economy and contributes significantly to the country’s gross domestic product (GDP) and foreign exchange earnings (FEE). The Indian tourism sector is also linked with important sectors such as transportation, infrastructure, and handicraft, which further helps in the growth and development of the country.

The Ministry of Tourism has made various efforts to expand the tourism infrastructure at various destinations in India. These efforts are a judicious blend of traditions, legacy, religion and eco-tourism projects that intend to offer the tourists a holistic experience.

India currently holds the 12th position in Asia and 68th position in the list of overall in the list of the world's most attractive tourist destinations, as per the Travel and Tourism Competitiveness Report 2011 by the World Economic Forum (WEF).

The increasing numbers of both domestic as well as international tourists have been very encouraging for the Indian travel and hospitality sector which has nearly doubled during the last three years. The tourism and hospitality industry experienced a healthy growth trend of 24.6 per cent during 2009-2010 as compared to 2008-2009. The total number of foreign tourists in the country in 2010 was 5.58 million as compared to 5.17 million in 2009, registering a rise of 8.1 per cent, according to the Market Research Division of the Ministry of Tourism.

Growth Trends

Tourism and hospitality being the largest service sector in the country, contributes around 6.23 per cent to the national GDP and 8.78 per cent of the total employment in the country. The country welcomes around 6 million international visitors every year and nearly 562 million domestic tourists.

The Union Ministry of Tourism compiles a monthly estimate on the foreign tourist arrivals (FTAs) and foreign exchange earnings (FEE) based on the total number of foreign visitors in the country. The important trends in the sector for June 2011 based on the report by the Ministry of Tourism are as follows:

  • The total number of tourists visiting the country during June 2011 were 0.39 million as compared to 0.37 million during June 2010 and 0.352 million in June 2009.
  • A growth of 7.2 per cent has been registered during June 2011 as compared to 4.9 per cent growth in June 2010. Also, the 7.2 per cent growth rate in June 2011 was higher than the observed growth rate of 7.0 per cent in May 2011.
  • FTAs during the period January-June 2011 were 2.91 million with a growth of 10.9 per cent as compared to the FTAs of 2.63 million with a growth of 8.9 per cent during January-June 2010 over the corresponding period of 2009.
  • FEE during the month of June 2011 were US$ 1,213 million as compared to FEE of US$ 1,020 million during the month of June 2010 and US$ 796 million in June 2009.
  • The growth rate in FEE in June 2011 over June 2010 was 18.9 per cent as compared to the growth of 28.1 per cent in June 2010 over June 2009. FEE from tourism during January-June 2011 were US$ 7,811 million with a growth of 14.2 per cent, as compared to US$ 6,842 million, with a growth of 36.6 per cent during January-June 2010, over the corresponding period of 2009.

Government Initiatives

The Government has allowed 100 per cent foreign investment under the automatic route in the hotel and tourism related industry, according to the Consolidated FDI Policy, released by DIPP, Ministry of Commerce and Industry, Government of India. The terms hotel includes restaurants, beach resorts and other tourism complexes providing accommodation and /or catering and food facilities to tourists.

The term tourism related industry includes:

  • Travel agencies, tour operating agencies and tourist transport operating agencies
  • Units providing facilities for cultural, adventure and wildlife experience to tourists
  • Surface, air and water transport facilities for tourists
  • Convention/seminar units and organisations

The Government of India has announced a scheme of granting Tourist Visa on Arrival (T-VoA) for the citizens of Finland, Japan, Luxembourg, New Zealand and Singapore. The scheme is valid for citizens of the above mentioned countries planning to visit India on single entry strictly for the purpose of tourism and for a short period of upto a maximum of 30 days.

The government has taken up a number of initiatives to enhance the tourism and hospitality sector performance and profits. Identification and development of 37 destinations within the last two years, and execution of 600 projects for 300 tourist spots across the country with an investment of over US$24 million are some projects taken by the Government to boost the travel industry and create awareness for the sector. These efforts have been coupled with monetary assistance from the Central government to the tune of US$ 5 million and US$ 10 million, as per the Tourism report by the Gujarat Government.

The Ministry of Tourism under the Marketing Development Assistance (MDA) Scheme has also set up committees to assist and motivate travel tour operators and help them to familiarise with international standards of hospitality. Also, the Government provides financial assistance to travel agents to participate in travel marts and annual conventions for travel and tourism, as per the Annual report by the Ministry of Tourism.

The Uttarakhand State Government has launched 100 per cent tax exemption program to exempt multiplex projects, amusement parks, and other tourist facilities for a period of five years under the Vision 2020 document. On the same lines, Rajasthan has reduced the luxury tax level to 8 per cent from the existing 10 per cent levels. Kerala, Madhya Pradesh, Orissa and Gujarat have entered into Private Public Partnerships (PPP) to promote travel and tourism to attract tourists.

According to the Eleventh Five Year Plan, a total of US$472 billion is planned to be invested in upgrading and modernising civil amenities like bridges, ropeways, roads, telecom services, ports, and other forms of transport as per a report by the Planning Commission.