Tourism & Hospitality Industry in India

Introduction

The Indian tourism and hospitality industry have 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 2019, FEEs were US$ 29.96 billion registering a growth of 4.8 per cent year-on-year and reached US$ 5.40 billion during January-February 2020.

According to WTTC, India ranked third among 185 countries in terms of travel & tourism’s total contribution to GDP in 2018. India was ranked 34th in the Travel & Tourism Competitiveness Report 2019 published by the World Economic Forum.

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 incomes has continued to support 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 3.2 per cent year-on-year. During January-February 2020, Foreign Tourist Arrivals (FTAs) were 21,33,782.

In 2019, a total of 29,28,303 tourist arrived on e-Tourist Visa registering a growth of 23.6 per cent.

As of 2019, 4.2 crore jobs were created in the tourism sector in India which was 8.1 per cent of total employment in the country. The number is expected to rise by two per cent annum to 52.3 million jobs by 2028.

International hotel chains are increasing their presence in the country, as it will account for around 47 per cent share in the Tourism & Hospitality sector of India by 2020 & 50 per cent by 2022

Investments

India is also the third largest globally in terms of investment in travel & tourism with an investment of US$ 45.7 billion in 2018, accounting for 5.9 per cent of national investment.

During the period April 2000-December 2019, the hotel and tourism sector attracted around US$ 14.42 billion of FDI, according to the data released by Department for Promotion of Industry and Internal Trade (DPIIT).

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 give a boost to the tourism and hospitality sector of India are as follows:

• Ministry of Tourism launches Audio Guide facility App called Audio Odigos for 12 sites of India (including iconic sites).
• Prime Minister, Mr Narendra Modi urged people to visit 15 domestic tourist destinations
  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 India on the world tourism map.
• The Government of India is working to achieve one per cent share in world's international tourist arrivals by 2020 and 2 per cent share by 2025.
• Under Budget 2020-21, the Government of India allotted Rs 1,200 crore (US$ 171.70 million) for development of tourist circuits under Swadesh Darshan for eight north-eastern states.
• Under Budget 2020-21, the Government of India allotted Rs 207.55 crore (US$ 29.70 million) for development of tourist circuits under PRASHAD.
• Under Budget 2020-21, the Government of India allotted Rs 1,200 crore (US$ 171.70 million) for development of tourist circuits under Swadesh Darshan for eight north-eastern states.
• 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 per cent; those above Rs 7,501 (US$ 107.32) to 18 per cent to increase India’s competitiveness as a tourism destination.
• In September 2019, Japan joins a band of Asian countries, including Taiwan and Korea among others to enter into the Indian 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) is 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) for development and promotion of tourism in the North Eastern Region under the Swadesh Drashan 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 is Rs 82.51 crore (US$ 11.81 million).

Road Ahead

India’s travel and tourism industry has huge growth potential. The tourism industry is also looking forward to the expansion of E-visa scheme which is expected to double the tourist inflow to India. India's travel and tourism industry has the potential to expand by 2.5 per cent 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 as on January 2020, Re 1 = US$ 0.01402

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.