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By 2020, Tourism in India could contribute Rs 8,50,000 crores to the GDP. (Source- World Travel and Tourism Council- WTTC)

In other words, every man, woman and child could become richer by Rs 7,000. India has yet to realise its full potential from tourism. The Travel and Tourism industry holds tremendous potential for India's economy. Tourism plays a key role in socio-economic progress and it can provide impetus to other industries, create millions of new jobs, enterprise, infrastructure development, foreign exchange earnings and generate enough wealth to help pay off the international debt.

Incredible India !!

Conde Nast ranked her amongst the top 10 tourist destinations. Explore India - choose the locales of your choice, and see what each state has to offer. Lose yourself in the wonder that is India. Meander through lands steeped in chivalry and pageantry that begin before recorded history. Explore modern cities that have grown organically from the roots of a multi-hued past. Make a pilgrimage to holy shrines that echo with tales of antiquity. Frolic on a vast array of golden beaches that dot an enviable coastline, washed by two seas and an ocean. Sport with adventure in style. Let the jungle lure you to a fascinating world at a diverse array of wildlife sanctuaries and national parks. You could also offer the credit to the world class incentive programs, her ability to heal spiritually, her unmatched offering as a health destination or continually improved infrastructure facilities...... this is the wonder that is India.

India is probably the only country that offers various categories of tourism. These include history tourism, adventure tourism, medical tourism (ayurveda and other forms of Indian medications), spiritual tourism, beach tourism (India has the longest coastline in the East) etc.

India on the World Map

The Indian tourism industry did not have it so good since the early 1990s. Though the Indian economy has slowed, it is still growing faster than the rest of the world. With Indian economy growing at around 5% per annum and rise in disposable incomes of Indians, an increasing number of people are going on holiday trips within the country and abroad resulting in the tourism industry growing wings. The potential for India to attract tourists is unlimited and tourism can play an increasingly beneficial role in the Indian economy in the years to come.

Despite the numerous problems, tourism industry was the second-largest foreign exchange earner for India. Tourism contributes to 6.6% of India's GDP and created 39.5 million jobs in 2012. The total number of inbound tourists have grown at 16% in the last five years and are expected to grow at 12% in the next decade. During 2013, travel and tourism industry contributed Rs 63,160 crore to the economy. International tourists account for a little over 5 million visitors, while domestic market is seen at more than 500 million.

Going Forward- Destination India

India is now chalking up one of its strongest growth charts in a long time. As the Indian economy continues to open up in an effort to integrate with the world economy, benefits of doing business with and in India are increasing. With the results, hundreds of thousands of jobs are moving to the Indian shores from the West. This brings in its wake transit travelers, business travelers, business meets and holiday seekers.

A report by World Travel and Tourism Council says the country's economic contribution from tourism in the country is expected to grow by 7.3% in 2014 which will be outperforming the general economy by 2.5 percentage points.

The Indian tourism sector is seen generating $42.8 billion by 2017, according to an industry research note by auditing and consulting firm Deloitte Touche. Despite the challenges being faced in terms of a slowing economy, sluggish demand and security concerns, the country was fighting back and tourism developments were taking place, it said. "Although there will inevitably be some short- to medium-term set backs, the long-term outlook remains positive," it said. "Despite the deepening world economic crisis, India's economy remains in decent shape and is still experiencing some of the strongest growth rates in the world," the Deloitte report said.

It is fast turning into a volume game where an ever-burgeoning number of participants are pushing up revenues of industry players (hotels, tour operators, airlines, shipping lines, etc). This will result in greater room occupancies and average room revenues (ARRs) in the country. ARRs have moved up and room occupancy rates have also shot up.

Thus, the tourism sector is expected to perform well in future and the industry offers an interesting investment opportunity for long-term investors. Realising the potential in India, international and domestic hotel chains were rushing to cash in on it. Medical tourism was poised for rapid development in the future and India is busy developing first-class facilities to attract this multi-billion dollar niche market.

Government Policy Initiatives

Keenly aware of the unfolding boom in the tourism industry, the Indian government is lending a hand to the growth of the industry. In an unprecedented focus on tourism, the government unfolded a slew of initiatives including implementation of electronic visas, a thrust on heritage and pilgrim tourism and creation of new tourist circuits. Indian government is also addressing the connectivity issue through upgradation of existing airports and building new ones and improving infrastructure.

The government has already relaxed the criteria to receive a visa for medical tourism. It is also considering other incentives such as offering air travel and accommodation for foreign tourists who visit India for the third time. It may also pick up the bill for tour operators promoting domestic and medical tourism and is mulling income tax exemption for hoteliers if they invest 50 percent of profits into infrastructure.

The government has extended infrastructure status to tourism, thus opening the doors to cheap, long-term funds to help finance tourism infrastructure. The government has extended the benefits of section 10(23G) of the Income Tax Act, 1961 to institutions financing hotels of three-star category and above. A top level executive of Travel Finance Corporation of India (TFCI) is all smiles as he says, "This has benefited TFCI as the company has a major part of its portfolio in the exempted category." And this smile is now strongly percolating down to all tourism industry players in the country.

The divestment of government’s stake in government run hotels was another step in the right direction. Professionals are increasingly stepping in to take over this service-oriented industry. Global best practices, cost cuts and service with a smile are fast turning a norm. Having realised the benefits of tourism, several State governments lay a lot of stress on boosting tourism.

The Scene Till Now

Some major international events like 9/11, US-led war against terror and SARS hit the tourism industry over the past few years. Cutting down of routes by domestic airlines and increase in airfares last year also led to a fall in the movement of people in the country. The Mumbai terror attacks, targetting two premium hotels, also tarnished the country's reputation, drastically reducing hotel occupancy levels, and affecting year-end travel. The adverse travel advisories by many countries to their citizens too contributed to a significant slowdown in tourism in India.

India's Tourism Competitiveness

However, India continues to lag in travel and tourism competitiveness, ranking 65 out of 140 countries and ranking 11th in the Asia Pacific region according to the World Economic Forum's Travel and Tourism Competitiveness Report 2013.

Many factors pose a constraint to the arrival and free flow of tourists and discourages tourism in India- limited infrastructure, poor hygiene standards, rude, fleecing taxi and rickshaw drivers, beggars hassling tourists, law & order situation in some areas, safety of women tourists, frequent thefts, misbehaviors and corruption are major impediments in improving India's image.

There were other negatives too. Consider this- expenses per night of stay for a tourist in India during the SE Asian currency crisis was $100 whereas it was around $35-40 in the SE Asian countries. This hurt Indian tourism. Though this discrepancy has come down, still there is some gap. Some of the reasons for this are high luxury and entertainment taxes and high landing charges applicable in Indian airports.

Costs are also high because tourism is a state subject. Each state separately spends on tourism and tourism related activities, whereas if these funds were spent in a cohesive manner by a nodal agency to showcase the entire country as one destination, the results would probably have been far more spectacular. Currently, the centre is only allocating finances for tourism projects. But the government is trying to convince states on the benefits of bringing tourism under the aegis of the Central government on to the concurrent subject on to the concurrent list.


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