Indian tourism industry: A constant contributor to economy

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India has witnessed steady growth in tourism, with increasing numbers of both domestic and international tourists exploring its treasures in recent years. The industry plays a significant role in contributing to the country’s economy, job creation and revenue generation while holding immense potential for further growth.

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India harbours a rich cultural and historical heritage. It is endowed with multiplicity in ecology, terrains and places of natural beauty throughout the country. India, the 7th largest country in the world, is marked by mountains as well as the sea (Bay of Bengal in the east and the Arabian Sea on the west) that impart a distinct geographical identity. The country covers an area of 32, 87,263 sq. km. It extends from the Himalayas in the north to the tropical rainforests in the south.

An amazing feature that a traveller would notice while travelling across the country is that no two cities or states in India are the same. Hence the traveller finds himself being greeted by diverse cuisines, faiths, arts, crafts, music, nature, lands, tribes, history, and also adventure sports. This essentially shows that there are a large number of amazing tourist destinations for different types of travellers, across the country.

The tourism industry in India has shown steady growth over the years, contributing significantly to the country’s economy. According to reports, India welcomed over 6 million foreign tourists in 2022, and this number continues to rise.

Indian Travel & Tourism Industry

The market size of the domestic travel and tourism industry in FY20 was estimated at US$ 75 billion. It is expected to be at US$ 125 billion by FY27. According to a report by Visa Inc., the market size of the sector is expected to reach US$ 1 trillion by 2047.

In terms of world rankings, the Indian tourism industry has achieved notable recognition. The World Travel & Tourism Council (WTTC) ranked India as the 2nd country in terms of Travel & Tourism Employment in 2021. This indicates the significant role of the tourism sector in providing employment opportunities and contributing to job creation in the country.

Furthermore, India was ranked 6th in 2021 by the WTTC in terms of the ‘contribution of Travel & Tourism to GDP’. This highlights the substantial economic impact of the tourism industry on India’s overall GDP, showcasing its importance as a revenue-generating sector.

In terms of overall travel and tourism development, India is ranked 54th according to the World Economic Forum Travel & Tourism Development Index of 2022. This index takes into account various factors such as business environment, safety and security, infrastructure, cultural resources, natural resources, and others to assess the development and competitiveness of the travel and tourism sector in different countries.

Growth Drivers

The tourism sector offers distinct types of tourism like – heritage tourism, cultural tourism, medical tourism, business tourism, sports tourism and coastal tourism. Yet the growth drivers of the tourism industry and the Indian economy at large will be Spiritual tourism, Medical & wellness tourism, Adventure & sports tourism, Business travellers & MICE and Travel mobility.

Spiritual tourism-about 60% of domestic tourism in India is spiritual in nature. Nearly 30.5 million international travellers are expected to visit India by 2028 for spiritual tourism.

Medical and wellness tourism- 21% of international travellers in 2021 foraged for medical treatment in India. This tourism segment has the potential to create nearly 24 million jobs by 2032.

Adventure and sports tourism- has the potential to create 6 million jobs by 2032. (An average adventure tourist spends about US$2,900 per trip).

Business travellers and MICE (Meetings, Incentives, Conferences, and Exhibitions)– 12.1% of foreign tourists in 2021, visited India for business purposes. India’s share in the global MICE market is expected to increase in the coming years.

Travel mobility –with an investment worth US$1.5 trillion (through the National Infrastructure Pipeline Scheme 2020-25), the number of Airports in India will increase to 220 by 2025.

Making Tourism Alluring

Several initiatives have been undertaken by the Ministry of Tourism to boost the tourism sector and to increase India’s competitiveness as a tourism destination. Some of the initiatives are:

Government Initiatives to Boost Tourism

Dekho Apna Desh initiative was launched to create awareness among the citizens about the rich heritage and culture of the country. It aimed at encouraging Indians to travel within the country.
The Centre provides financial assistance to state governments/Union Territories/Central Agencies for the development of tourism-related infrastructure and facilities in the country under its schemes of Swadesh Darshan, PRASHAD and Assistance to Central Agencies.
Under the ‘Capacity Building for Service Providers’ (CBSP) Scheme programmes were conducted to train and upgrade manpower to provide better service standards.
Incredible India Tourist Facilitator Certification Programme, a digital initiative was launched for creating an online learning platform with the objective of creating well-trained professional tourist facilitators across the country to support tourists.
A 24×7 toll-free Multi-Lingual Tourist Helpline has been set up.
Facility of e-Visa for 5 sub-categories i.e. e-Tourist visa, e-Business visa, e-Medical visa, e-Medical Attendant visa and e-Conference visa for nationals of 166 countries.
E-Visa has been further liberalised and the visa fee has been substantially reduced.
New mountain peaks have been opened for Mountaineering/Trekking to give a boost to adventure tourism in the country.
GST has been reduced on hotel rooms with tariffs of Rs 1,001 to Rs. 7,500/night to 12%. For rooms with a tariff above Rs. 7,501 GST is 18%.
On the recommendation of the Ministry of Tourism, 59 tourism routes have been awarded to the identified airlines by the Ministry of Civil Aviation under the RCS UDAN Scheme. 51 of these routes have been operationalized to date.
100% foreign direct investment (FDI) in the tourism industry is allowed under automatic route. 100% FDI is allowed for tourism construction projects, including the development of hotels, resorts, and recreational facilities.
Ministry of Tourism, Government of India has declared “Incredible India! Visit India Year 2023”, with an aim to enhance visitor arrival.
In February 2023, the government introduced the ‘Best Tourism Village Competition Portal’ and ‘Rural Tourism Portal’ for promoting tourism in the country.

Way ahead

It has been observed that international tourists spend 26 times more than domestic tourists during their visit. The financial benefits of international tourism are also evident in the foreign exchange earnings generated by the sector. In 2022, foreign exchange earnings from tourism in India saw a remarkable increase of 107%, reaching Rs 1,34,543 crore compared to Rs 65,070 crore in 2021. This substantial growth in earnings emphasizes the significance of attracting and catering to global visitors.

Taking a long-term perspective, attracting international tourists remains a key focus for the Indian tourism industry. By promoting India’s rich cultural heritage, historical sites, natural beauty, and unique experiences, the country can continue to enhance its position as a preferred destination for global travellers. Efforts to provide a welcoming and convenient environment for international tourists, along with initiatives to showcase India’s diverse tourism offerings, can contribute to sustained growth in the tourism sector and boost the country’s overall economy.