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Tourism Industry In India (Nov 2006)

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Autor:  anton  16 December 2010
Tags:  Tourism,  Industry
Words: 2255   |   Pages: 10
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Tourism Industry in India (Nov 2006)


В• Introduction

В• Incredible India

В• Boom Time

В• Economic Growth Engine

В• India on the World Map

В• The scene till now

В• Govt Policies and Initiatives

В• Open Eyes- Open Arms

В• Challenges

В• Conclusion

В• References


It is boom time for India's Tourism and Hospitality sector. Driven by a surge in business traveller arrivals and a soaring interest in India as a tourist destination, the year 2006 has been the best year till date.

Incredible 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.

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....... this is the wonder that is India.

Indian Tourism industry is one of the most important export industries of the country. Although the international tourist inflow is relatively low, India has found tourism emerging as an important sector of its economy.

Tourism yields substantial foreign exchange for India. It is turning into a volume game where a large number of participants are contributing to the revenue of the industry. Segments such as hotels, tour operators, airlines, shipping etc., are significant contributors to this revenue.

With lot of imagination and ideas the Indian tourism sector is gathering momentum and is set to have not only large numbers of foreign tourists but also make a big share in the country's Gross Domestic Product ( GDP ). Recent statistics have revealed that during the first quarter of 2006, the performance of the tourism industry has been very encouraging which has registered an 11% increase in foreign tourist arrivals.

RNCOS' recent market research report, "Indian Tourism Industry Outlook ( 2006 )" draws a colorful picture about the future of Indian tourism as its share of employment is expected to account 10%, including self-employment.

According to the market researchers, in 2006, the total in-bound tourists were 1.28Mn while the same was 1.14Mn in 2005. The resulting foreign exchange earnings were as high as 12% of an amount of $1,780Mn.

Boom time !

According to global hotel and hospitality consulting firm, HVS International, the strong performance in tourist arrivals in 2005 can be attributed to a strong sense of business and investment confidence in India inspired by:

В• India's strong GDP performance

В• Strengthening of ties with the developed world, and

В• Opening of sectors of the economy to private sector/ foreign investment.

The efforts made by the Ministry of Tourism & Culture in the last few years have had a salutary effect on India's tourism industry.

В• Foreign tourist arrivals are expected to witness a growth of 78 per cent in 2006 over 2001 (last 5 years)

В• Growth in foreign exchange earnings is expected to be of the order of 122 per cent during this period.

В• As per estimates (Ministry of Tourism), on an average, about 3.1 million additional jobs per year have been created directly and indirectly in the tourism sector in the last four years.

India is fast emerging as one of the most enticing destinations for the global leisure traveller. The Readers Travel Awards 2006, conducted by CondГ© Nast Traveller has recently placed India at number four among the world's must-see countries, up from number nine in 2003. The Incredible India campaign has also been a huge success.

An economic growth engine

As an engine for economic growth, the tourism and hospitality sector cuts across the rural-urban divide, and bridges economic boundaries. According to The World Travel & Tourism Council's 2006 Travel and Tourism Economic Research, the travel and tourism sector in India is expected to generate a total demand of US$ 53,544.5 million of economic activity in 2006, accounting for nearly 5.3 per cent of GDP and 5.4 per cent of total employment.

According to the report, the sector is expected to grow at a rate of 8.4 per cent in 2006 and by 8 per cent per annum, in real terms, between 2007 and 2016.

Growth in the tourism and hospitality sector

GDP Employment Visitor Exports Personal T&T Capital Investment Government Expenditure

Outlook for 2006 (Real Growth) 7.8% 1.4% 10.9% 6.9% 8.3% 7.7%

By 2020, Tourism in India could contribute Rs 8,50,000 crores to the GDP. (Source- 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. It can provide impetus to other industries, create millions of new jobs and generate enough wealth to help pay off the international debt. That is why we have included Tourism amongst the Core Sectors of the Indian Economy.

India on the World Map

The Indian tourism industry has not had it so good since the early 1990s. With global recession seeming to have waned decisively, Indian economy growing at around 7% 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.

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). Thus, the tourism sector is expected to perform very well in future and the industry offers an interesting investment opportunity for long-term investors.

Despite the numerous problems, tourism industry was the second-largest foreign exchange earner for the country during the year ended March 2003. During 2002, 2.2 million foreigners visited India. Foreign tourist in-flow has risen 20% this year.

India : An Idea who's time has come

Conde Nast ranked her amongst the top 10 tourist destinations. JBIC ranked her as the fifth most attractive investment destination. The World Social Forum, AdAsia, World Bamboo Congress, Commonwealth Games, Laureus World Sports Academy Global Submit, F1 alongwith some of the biggest expos and conferences of the world chose her to play host.

Presenting India to you Readers. The subcontinent to whose splendor, diversity and world-class facilities the world has finally woken up to. Away from threats, untouched by SARS and politically stable India is the flavor of the season. Take a fresh look at her flourishing economy (double digit growth in third quarter of 2003- 2004), geographically strategic location, faith fortified by major software firms to make it a global backup hub for software, the staggering figure of over 366 national/international level expos and about 100 congress already scheduled for leap year 2004 (of which over 50 in January alone), her forex reserves, her rising Sensex, rapidly growing consumer markets, presence of world's finest and choicest brands and the exceptional growth in interest from FIIs, to understand why India offers a feel good factor. Truly, India is one of the most exciting emerging markets in the world.

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. The adverse travel advisories by many countries to their citizens and riots in Gujarat too contributed to a significant slowdown in tourism in India.

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.

Government Policy Initiatives

Keenly aware of the unfolding boom in the tourism industry, the government is lending a hand to the growth of the industry. In the Union Budget for 2003-04, government has extended infrastructure status to tourism, thus opening the doors to cheap, long-term funds to help finance tourism infrastructure.

Outlay for tourism for the Tenth Five Year Plan is Rs. 2900 Crore. For the financial year 2003-04 the outlay is Rs 325 crore. This is up sharply from Rs 150 crore allocated in the previous financial year. State governments such as Kerala lay a lot of stress on boosting tourism. The state has an outlay of Rs. 74.25 crore for the financial year 2003-04.

The Government of India 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 is 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.

A policy thrust

The objective of the existing Tourism Policy of the Government of India is to position tourism as a major engine of economic growth and to harness its direct and multiplier effects for employment and poverty eradication in an environmentally sustainable manner.

The present government's major policy initiatives include:

В• Liberalization in aviation sector

В• Pricing policy for aviation turbine fuel which influences internal air fares

В• Rationalization in tax rates in the hospitality sector

В• Tourist friendly visa regime

В• Immigration services

В• Procedural changes in making available land for construction of hotels

В• Allowing setting up of Guest Houses

The Indian Ministry of Tourism has identified 31 villages across the country to be developed as tourism hubs. The states in which these villages have been identified include Himachal Pradesh, Gujarat, Maharashtra, Bihar, Karnataka, Madhya Pradesh, Andhra Pradesh, Kerala, Tamil Nadu, Orissa, Assam, Sikkim, Rajasthan and West Bengal.

Open skies, open arms

The government's Open Skies policy, permission for domestic airlines to commence international flights, start-up of various low-cost carriers, and fleet expansion by domestic players has created a huge incentive for domestic travellers to explore far-off destinations within and outside India. The booming aviation business is bringing an ever-increasing number of passengers to India, and pulling Indians out of their homes and into hotels. The numbers, according to the Ministry of Tourism, speak for themselves:

The number of domestic and international passengers has increased fifteen-fold to 73.34 million in 2005/06 since 1970.

Domestic air passenger traffic grew by 16.8 per cent in 2005/06 compared to 2004/05.

International passenger traffic observed a growth of 16.9 per cent in the same period.

Private airlines accounted for 77.0 per cent of the total domestic traffic.

Health tourism

India is gradually gathering popularity as a health tourist destination. A study by McKinsey and Confederation of Indian Industry (CII) says that at its current pace of growth, healthcare tourism alone can rake over US$ 1.7 billion additional revenues by 2012. Medical tourism is now a US$ 299 million industry, as about 100,000 patients come each year. The country needs to exploit the cost advantage it can offer to a health tourist, the study said. The biggest driver for healthcare tourism is the disparity in costs.

A heart surgery in the US costs US$ 30,000 as compared to US$ 6,000 in India.

A bone marrow transplant in the US costs US$ 250,000 and US$ 26,000 in India.

"With yoga, meditation, ayurveda, allopathy, and other systems of medicine, India offers a unique basket of services to an individual that is difficult to match by other countries," the CII study said. Clinical outcomes in India are at par with the world's best centres since India has internationally qualified and experienced specialists.

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.


В• Infrastructure Issues

В– Roads

В– Railways

В– Electricity

В– Water

В• Flight Capacity Limitations

В• Small and staggered players in domestic tourism


Seeing the current buoyancy in the Indian economy, clubbed with the low cost advantages of traveling and medical treatment, the Tourism Industry brings forth more promise of a boom and a boom to last for some time. But there is a point of caution. Grappling with the infrastructure issues, India may face stiff competition from its S.E Asian neighbors like Malaysia and Thailand. The cost advantage is vaporizing fast and a lax attitude can be suicidal at this point of time.


В• www.incredibleindia.com

В• http://www.traveldailynews.com/subcat.asp?subcategory_ID=98

В• www.medical-tourism-india.com

В• www.indiacore.com/tourism2.htm

В• http://www.economywatch.com/business-and-economy/index.html

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