India is one of the largest travel & tourism markets in the world. It offers diverse tourism options such as cruises, adventure, medical, wellness, sports, MICE, eco-tourism, film, rural and religious travel. India has been recognised as a spiritual tourist destination by domestic and international visitors. India ranked 34 in the Travel & Tourism Competitiveness Report 2019 published by the World Economic Forum.
In World Travel and Tourism Council’s (WTTC) Economic Impact 2020 report, India’s travel & tourism sector contributed US$121.9 billion or 4.7% to the total GDP. India ranked 10 in the world in terms of the travel & tourism sector’s contribution to the GDP. The sector provides employment to 31,785,200 people and accounted for 7.3% of the total jobs in 2020. Despite the pandemic, in 2020, international visitors spent Rs. 890.7 billion, while domestic visitors spent Rs. 7,201.4 billion on travel.
Impact of COVID-19 on the Travel & Tourism Sector
In 2020, total contribution of the sector to India’s GDP declined by 36.3% over 2019.
The dip was mainly due to international and domestic travel restrictions, lockdowns and social distancing measures implemented by the Govt. of India. In 2020, the sector also recorded a 20.8% decline in employment.
In terms of visitor spending, the decline was more prominent in the international visitor segment—a 61% or US$18.8 billion decrease over 2019. In the domestic visitor segment, the decline was 30.7% or US$42.9 billion.
Govt. Measures to Support the Tourism Sector
To boost the domestic travel and tourism sector, the Govt. of India has launched several schemes through various ministries from 2020 to 2021. The Ministry of Tourism has outlined policies to support new tourism products such as development and promotion of caravans and caravan camping parks. On January 25, 2021, the Union Tourism and Culture Minister, Mr. Prahlad Singh Patel, announced plan to develop an international-level infrastructure in Kargil (Ladakh) to promote adventure tourism and winter sports.
Further, to support the travel and tourism sector, the Ministry of Road Transport and Highways has introduced a new scheme—All India Tourist Vehicles Authorisation and Permit Rules, 2021. Through this scheme, a tourist vehicle operator can receive an ‘All India Tourist Authorisation/Permit’ online within 30 days of submitting an application.
By 2028, direct contribution of the tourism & hospitality sector to the GDP is expected to reach Rs. 12.68 trillion and International tourist arrivals are expected to reach 30.5 billion by 2028. To support this growth, India is offering e-Visa facility to 171 countries (as of March 2021).
On June 28, 2021, the Union Finance Minister, Smt. Nirmala Sitharaman, announced relief packages to revive tourism in the country. Some of the key schemes are as follows:
Financial Support for Travel and Tourism Stakeholders (TTS) and Registered Tourist Guides
The scheme is to be administered by the Ministry of Tourism through the National Credit Guarantee Trustee Company Ltd (NCGTC). Under the scheme, over 11,000 registered tourist guides and other travel and tourism stakeholders will receive financial support in the form of loans from various nationalised and private banks. Under this scheme, working capital/personal loans will be provided to people operating in the tourism sector to take care of liabilities and restart (after being impacted due to COVID-19).
The scheme covers 10,700 regional tourist guides and 904 Travel and Tourism Stakeholders (TTS) recognised by the Ministry of Tourism or State Governments.
Following incentives are included in the scheme:
Key benefit of the scheme is that there will be no processing charges, foreclosure/prepayment charges and no requirement for additional collaterals. The central government will be providing guarantees for these loans.
Free Tourist Visas to 5 Lakh Tourists
Once the visa issuance restarts, the Indian govt. will provide free visas to the first 5 lakh tourists. The benefit of free of charge visas will be available only once per tourist and the scheme will be applicable until March 31, 2022 or until issuance of 500,000 visas (whichever target is achieved earlier).
The scheme is expected to be a huge incentive for tourists on short-term visits (people who come in for a month). The total financial implications of this scheme would be Rs. 1 billion and once the scheme expires, regular fees for applying visas will be applicable.
Approval to Release Service Exports from India Scheme (SEIS) Scrips
On June 16, 2021, the Ministry of Finance has approved release of the SEIS scrips. Considering the circumstances after COVID-19, the Department of Expenditure, Ministry of Finance, has agreed to the proposal of the Department of Commerce for continuation of SEIS for 2019-20 with a financial allocation of Rs. 2,061 crore.
The SEIS offers incentives to registered service providers with transferable duty credit scrips as a percentage of their net foreign exchange earnings. These SEIS scrips can be used by service providers to pay several central duties and taxes, including the basic customs duty. SEIS scrips are currently given to tour operators on their forex earnings (at a rate of 7%).
Travel and tourism sector is one of the key contributors to Indian economy, and govt. of India is taking proactive measures to help the industry navigate the COVID-led challenges.
Measures taken by the Govt. of India and Ministry of Finance are expected to significantly help stakeholders in the sector. These measures are expected to infuse the required liquidity to support in operations in near-term. It will also support government-approved tourist guides, who have been hit by the ongoing slowdown in the sector amid the pandemic and will help the sector to achieve the projected GDP contribution of Rs. 12.68 trillion by 2028.