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Travel market in India: US$ 40 billion by 2020

Travel market in India: US$ 40 billion by 2020

Ravi Capoor, Former CEO, IBEF

May 27, 2016 6:23 PM

The Indian travel market has managed to continue its growth run over the past many years. Attracting travellers across segments like business, leisure, medical etc, India has established its presence in the global travel market. For instance, it is predicted that the total addressable travel market in India will be US$ 40 billion by 2020. There is no exaggeration in stating that the Indian tourism and hospitality industry has emerged as one of the key drivers of growth among the services sector in India. Tourism in India has significant potential considering the rich cultural and historical heritage, variety in ecology, terrains and places of natural beauty spread across the country. Tourism is also a potentially large employment generator besides being a significant source of foreign exchange for the country.

Foreign tourist arrivals in India during the period January-December 2015 stood at 80.16 lakh with a growth of 4.4 per cent. With government initiatives like E-Tourist Visa facility, the number of international tourists visiting India is expected to grow by leaps and bounds. The E-Tourist Visa facility is currently available to citizens of 150 countries and a total of 4,45,300 tourist arrived on e-Tourist Visa during January-December 2015 as compared to 39,046 during January-December 2014 registering a growth of 1040.4 per cent. Similarly, on the domestic front, India is amongst the fastest growing domestic air travel market in the world.

Apart from the proactive government initiatives, the private sector, established global travel giants and first generation Indian start-ups have played an important role in developing the Indian travel market. For instance, the online travel market alone is expected to account for around 40-50 per cent of the total transactions by 2020. While the current number stands at around 12 per cent, with Tier-II and Tier-III cities driving growth in the online travel market, experts are confident that the online travel market will continue to grow in the long run.

On another front, India is also gradually becoming a destination of choice for medical value travel (MVT), mainly because of high quality healthcare offered to patients by world-class hospitals and facilities that have come up across the country. With MVT estimated to grow at a CAGR of 17.9 per cent to US$ 32.5 billion by 2019 globally, India is expected to register a CAGR of 30 per cent to US$ 10.6 billion in this period, thus capturing close to one-third of the global MVT market.

Overall, the Indian travel market has matured and is all set to cash-in on the increasing penetration and acceptability across domestic and international markets.

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