Tourism & Hospitality Industry in India

Introduction

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. In FY20, 39 million jobs were created in the tourism sector in India; this accounted for 8.0% of the total employment in the country. The number is expected to rise by two% annum to 52.3 million jobs by 2028.

According to WTTC, India ranked 10th among 185 countries in terms of travel & tourism’s total contribution to GDP in 2019. During 2019, contribution of travel & tourism to GDP was 6.8% of the total economy, ~ Rs 13,68,100 crore (US$ 194.30 billion).

Market Size

India is the most digitally advanced traveller nation in terms of digital tools being used for planning, booking, and experiencing a journey. India’s rising middle class and increasing disposable income has supported the growth of domestic and outbound tourism.

During 2019, foreign tourist arrivals (FTAs) in India stood at 10.89 million, achieving a growth rate of 3.20% y-o-y. During 2019, FEEs from tourism increased 4.8% y-o-y to Rs 1,94,881 crore (US$ 29.96 billion). In 2019, arrivals through e-Tourist Visa increased by 23.6% y-o-y to 2.9 million.

International hotel chains are increasing their presence in the country, and it will account for around 47% share in the tourism and hospitality sector of India by 2020 and 50% by 2022

Investments

India was globally the third largest in terms of investment in travel and tourism with an inflow of US$ 45.7 billion in 2018, accounting for 5.9% of the total investment in the country.

Hotel and Tourism sector received cumulative FDI inflow of US$ 15.28 billion between April 2000 and March 2020.

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 planned by the Government of India to boost the tourism and hospitality sector of India are as follows:

• Ministry of Tourism launched Dekho Apna Desh webinar series to provide information on many destinations and sheer depth and expanse on the culture and heritage of India. 
• Ministry of Tourism launched Audio Guide facility App called Audio Odigos for 12 sites in India (including iconic sites).
• Prime Minister, Mr Narendra Modi urged people to visit 15 domestic tourist destinations in
  India by 2022.
• Statue of Sardar Vallabhbhai Patel, also known as ‘Statue of Unity’, was inaugurated in October 2018. It is the highest standing statue in the world at a height of 182 metre. It is expected to boost the tourism sector in the country and put it on the world tourism map.
• Government of India is working to achieve one% share in world's international tourist arrivals by 2020 and 2% share by 2025.
• Under Budget 2020–21, the Government of India has allotted Rs 1,200 crore (US$ 171.70 million) for development of tourist circuits under Swadesh Darshan for eight Northeast states.
• Under Budget 2020–21, the Government of India has allotted Rs 207.55 crore (US$ 29.70 million) for development of tourist circuits under PRASHAD scheme.
• In 2019, Government reduced GST on hotel rooms with tariffs of Rs 1,001 (US$ 14.32) to Rs 7,500 (US$ 107.31) per night to 12% and those above Rs 7,501 (US$ 107.32) to 18% to increase India’s competitiveness as a tourism destination.
• In September 2019, Japan joined a band of Asian countries, including Taiwan and Korea among others, to enter India’s tourism market.

Achievements

Following are the achievements of the Government during 2019–20:

• During 2019–20, an additional fund Rs 1,854.67 crore (US$ 269.22 million) was sanctioned for new projects under the Swadesh Darshan scheme.
• Ministry of Tourism sanctioned 18 projects covering all the North Eastern States for Rs 1,456 crore (US$ 211.35 million) to develop and promote of tourism in the region under Swadesh Darshan and PRASHAD schemes.
• Statue of Sardar Vallabhbhai Patel, also known as ‘State of Unity’, was inaugurated in October 2018 and the total revenue generated till November 2019 stood at Rs 82.51 crore (US$ 11.81 million).

Road Ahead

India’s travel and tourism industry has huge growth potential. The industry is also looking forward to the expansion of e-Visa scheme, which is expected to double the tourist inflow in India. India's travel and tourism industry has the potential to expand by 2.5% on the back of higher budgetary allocation and low-cost healthcare facility according to a joint study conducted by Assocham and Yes Bank.

Note: *in US$ terms

Note: Conversion rate used in April 2020, Rs 1 = US$ 0.013123

References: Media Reports, Ministry of Tourism, Press Releases, Department for Promotion of Industry and Internal Trade (DPIIT), Press Information Bureau (PIB), Union Budget 2020–21

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