Tourism and Hospitality
The World Travel and Tourism Council forecasts Indian tourism sector to grow at annual average growth rate of 7 per cent over the next ten years.

Tourism & Hospitality Industry in India

Latest update: September, 2015

Growth of Tourism and Hospitality in India

• Tourism in India accounts for 6.8 per cent of the GDP and is the third largest foreign exchange earner for the country

• The tourism and hospitality sector’s direct contribution to GDP totalled US$ 44.2 billion in 2015

• Over 2006–15, direct contribution is expected to register a CAGR of 10.5 per cent

• The direct contribution of travel and tourism to GDP is expected to grow 7.2 per cent per annum to US$ 88.6 billion (2.5 per cent of GDP) by 2025


Increase in foreign arrivals

•Over 7.757 million foreign tourist arrivals were reported in 2015

•Foreign tourist arrivals increased at a CAGR of 7.1 per cent during 2005-15

•By 2025, foreign tourist arrivals are expected to increase to 15.3 million, according to the World Tourism Organisation


Last Updated: September, 2015

SECTORAL REPORT | August, 2015


The Indian tourism and hospitality industry has emerged as one of the key drivers of growth among the services sector in India. The third-largest sub-segment of the services sector comprising trade, repair services, hotels and restaurants contributed nearly US$ 187.9 billion or 12.5 per cent to the Gross Domestic Product (GDP) in 2014-15, while growing the fastest at 11.7 per cent Compound Annual Growth Rate (CAGR) over the period 2011-12 to 2014-15. 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.

Market Size

  • The number of Foreign Tourist Arrivals (FTAs) has grown steadily in the last three years reaching around 4.48 million during January–July 2015. Foreign exchange earnings (FEEs) from tourism in terms of US dollar grew by 3.2 per cent during January-July 2015 as compared to 1.9 per cent over the corresponding period of 2013. FEEs during the month of July 2015 were Rs 11,452 crore (US$ 1.74 billion) as compared to FEEs of Rs 10,336 crore (US$ 1.57 billion) in July last year.
  • Foreign Exchange Earnings (FEEs) between January-July 2015 were US$ 11.41 billion compared to US$ 11.06 billion in the same period last year. The growth rate in FEEs in rupee terms in January-July 2015 was 6.9 per cent.


The tourism and hospitality sector is among the top 15 sectors in India to attract the highest foreign direct investment (FDI). During the period April 2000-May 2015, this sector attracted around US$ 8.1 billion of FDI, according to the data released by Department of Industrial Policy and Promotion (DIPP).

With the rise in the number of global tourists and realising India’s potential, many companies have invested in the tourism and hospitality sector. Some of the recent investments in this sector are as follows:

  • Fairfax-owned Thomas Cook has acquired Swiss tour operator Kuoni Group's business in India and Hong Kong for about Rs 535 crore (US$ 85.6 million) in order to scale up inbound tour business
  • US-based Vantage Hospitality Group has signed a franchise agreement with India-based Miraya Hotel Management to establish its mid-market brands in the country.
  • Thai firm Onyx Hospitality and Kingsbridge India hotel asset management firm have set up a joint venture (JV) to open seven hotels in the country by 2018 for which the JV will raise US$ 100 million.
  • ITC is planning to invest about Rs 9,000 crore (US$ 1.42 billion) in the next three to four years to expand its hotel portfolio to 150 hotels. ITC will launch five other hotels - in Mahabalipuram, Kolkata, Ahmedabad, Hyderabad and Colombo - by 2018.
  • Goldman Sachs, New-York based multinational investment banking fund, has invested Rs 255 crore (US$ 40.37 million) in Vatika Hotels.
  • Japanese conglomerate SoftBank will lead the Rs 630 crore (US$ 95.6 million) funding round in Gurgaon based OYO Rooms.
  • MakeMyTrip will acquire the travel planning website Mygola and its assets for an undisclosed sum, and will together look to focus on innovating the online travel segment.

Government Initiatives

The Indian government has realised the country’s potential in the tourism industry and has taken several steps to make India a global tourism hub. Some of the major initiatives taken by the Government of India to give a boost to the tourism and hospitality sector of India are as follows:

  • Government of India plans to cover 150 countries under e-visa scheme by the end of the year besides opening an airport in the NCR region in order to ease the pressure on Delhi airport.
  • The Tourist Visa on Arrival (TVoA) scheme enabled by Electronic Travel Authorisation (ETA), launched by the Government of India on November 27, 2014 for 43 countries has led to sharp growth in usage of the facility. During the month of July, 2015 a total of 21,476 tourist arrived on e-Tourist Visa as compared to 2,462 during the month of July, 2014 registering a growth of 772.3 per cent. During January-July, 2015 a total of 1,47,690 tourist arrived on e-Tourist Visa as compared to 14,415 during January-July, 2014 registering a growth of 924.6 per cent.
  • The Government of India has set aside Rs 500 crore (US$ 79.17 million) for the first phase of the National Heritage City Development and Augmentation Yojana (HRIDAY). The 12 cities in the first phase are Varanasi, Amritsar, Ajmer, Mathura, Gaya, Kanchipuram, Vellankani, Badami, Amaravati, Warangal, Puri and Dwarka.
  • Under ‘Project Mausam’ the Government of India has proposed to establish cross cultural linkages and to revive historic maritime cultural and economic ties with 39 Indian Ocean countries.

Road Ahead

India’s travel and tourism industry has huge growth potential. The medical tourism market in India is projected to reach US$ 3.9 in size this year having grown at a CAGR of 27 per cent over the last three years, according to a joint report by FICCI and KPMG. Also, inflow of medical tourists is expected to cross 320 million by 2015 compared with 85 million in 2012. The tourism industry is also looking forward to the expansion of E-visa scheme which is expected to double the tourist inflow to India. Rating agency ICRA ltd estimates the revenue growth of Indian hotel industry strengthening to 9-11 per cent in 2015-16. India is projected to be the fastest growing nation in the wellness tourism sector in the next five years, clocking over 20 per cent gains annually through 2017, according to a study conducted by SRI International.

Exchange Rate Used: INR 1 = US$ 0.0152 as on September 18, 2015

References: Media Reports, Ministry of Tourism, Press Releases, Department of Industrial Policy and Promotion (DIPP)

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.


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