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: August, 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: August, 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. Tourism in India is a potential game changer. It is a sun rise industry, an employment generator, a significant source of foreign exchange for the country and an economic activity that helps local and host communities.

The value of the brand to the consumer, the growth in emerging markets, the importance of consumer-facing technology, and development and retention of human capital have helped shape the tourism industry over the past five years.

The travel and tourism sector has developed into an industry with an annual economic report (direct, indirect and induced) of around US$ 6.5 trillion worldwide. The global hotel industry generates approximately between US$ 400-500 billion in revenue each year, one third of that revenue is attributable to the United States.

Market Size

  • The number of Foreign Tourist Arrivals (FTAs) has grown steadily in the last three years reaching around 7.46 million during January–December 2014. Foreign exchange earnings (FEEs) from tourism in terms of US dollar grew by 7.1 per cent during January-December 2014 as compared to 5.9 per cent over the corresponding period of 2013. FTAs during the Month of December 2014 were Rs 120,083 crore (US$ 19.02 billion) as compared to FTAs of Rs 107,671 crore (US$ 17.05 million) during January-December 2013 over the corresponding period of 2012. There has been a growth of 6.8 per cent in December 2014 over December 2013.
  • Foreign Exchange Earnings (FEEs) during the month of December 2014 were Rs 12,875 crore (US$ 2.03 billion) as compared to Rs 11,994 crore (US$1.9 billion) in December 2013 and Rs 10,549 crore (US$1.67 billion) in December 2012.The growth rate in FEEs in rupee terms in December 2014 over December 2013 was 7.3 per cent. FEEs from tourism in rupee terms during January-December 2014 were Rs 120,083 (US$ 1,902.53) with a growth of 11.5 per cent over the corresponding period of 2013.
  • 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 a growth of 1,214.9 percent recently. For example, during the month of January 2015, a total of 25,023 tourist arrived by availing TVoA as compared to 1,903 TVoA during the month of January 2014.
  • Hospitality, a major segment of tourism, has grown by 10-15 per cent on the back of better consumer sentiment with the change of Government. As demand is going up occupancies are improving.


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-February 2015, this sector attracted around US$ 7,862.08 million 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:

  • 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.
  • Lalit Suri Hospitality Group is soon going to open its first international hotel in London. The company has acquired a heritage building called St Olave's near Tower Bridge in central London, which is now undergoing restoration to be converted into a five star hotel.
  • 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.
  • In Carlson Rezidor Hotel of Guwahati, Dharmpal Satyapal has invested close to Rs 300 crore (US$ 47.51 million) in the hotel for which they will get Rs 30 crore (US$ 4.75 million) annually.
  • 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.

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:

  • 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.
  • Prime Minister Shri Narendra Modi has approved to enter into a memorandum of understanding (MoU) between India and Oman for strengthening cooperation in the field of tourism.
  • Announcement by Mr Arun Jaitley, Minister of Finance, to extend Visa on Arrival Facility (VOA) to 150 countries in stages from the current 43, is a big step to promote tourism. The revenue from tourism sector can be utilised for the development of the country and can boost the economy of country.

Road Ahead

India’s travel and tourism industry has huge growth potential. The medical tourism market in India is projected to hit US$ 3.9 billion mark this year having grown at a compounded annual growth rate (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 E-visa scheme which is expected to double the tourist inflow to India. Enforcing the electronic travel authorisation (ETA) before the next tourism season, which starts in November, will result in a clear jump of at least 15 per cent, and this is only the start, as per Mr Madhavan Menon, Managing Director, Thomas Cook India.

ICRA ltd rating agency expects the revenue growth of Indian hotel industry strengthening to 9-11 per cent in 2015-16.

India is projected to be number one for growth globally 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$ 0.0157 as on April 28, 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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