Tourism Sector in India – Explained, pointwise

Introduction

A three-day National Conference of Tourism Ministers of States was held for the first time in Dharmsala (Himachal Pradesh) recently. The purpose of the Conference was to discuss, debate, and deliberate on modes and mechanisms to develop tourism sector in India. The meeting came up with ‘Dharamshala Declaration‘. The Dharamshala Declaration aims to recognise India’s role in contributing towards global tourism as well as focus on recovery by also promoting domestic tourism, which has been overlooked for long. India is a vast country with huge geographical, climatic, landscape, wildlife, heritage and cultural diversity. As such India has huge tourism potential. Yet this potential has remained under-utilized. In this context, the Ministry of Tourism has undertaken several initiatives to boost tourism in India.

What is the current status of Tourism Sector in India?

Before the onset of the pandemic, the contribution of tourism sector to India’s GDP had reached ~US$ 250 billion in 2018. However, the contribution had fallen to US$ 122 billion in 2020 due to pandemic. The share of Tourism to GDP has hovered around ~5-6%. With post-pandemic recovery, the tourism industry is  expected to reach US$ 512 billion by 2028.

Source: IBEF

Tourism Sector is the third-largest foreign exchange earner for the country in 2019.  The foreign exchange earnings between 2016 and 2019 increased at a CAGR of 7%, but dipped in 2020 due to the COVID-19 pandemic. By 2028, Indian tourism and hospitality is expected to earn US$ 50.9 billion as visitor exports compared with US$ 28.9 billion in 2018. Foreign Tourist arrivals had reached 10.9 million in 2019, before falling to 2.7 million in 2020 due to the pandemic.

India was ranked 34th in the Travel & Tourism Competitiveness Report 2019 published by the World Economic Forum. The Economic Impact 2019 Report published by the World Tourism and Travel Council (WTTC) has noted that between 2014-19, India witnessed the strongest growth in the number of jobs created (6.36 million), followed by China (5.47 million) and the Philippines (2.53 million).

In 2020, the Indian tourism sector accounted for 39 million jobs, which was 8% of the total employment in the country. By 2029, it is expected to account for about 53 million jobs. Tourism sector provides diverse opportunities for jobs like in hospitality/hotels/accommodation, transportation, tour guides, travel operations etc.

Source: IBEF. Components of Tourism Sector

What are the driving factors of Tourism Sector in India?

The Tourism Sector in India is driven by various factors like diverse attractions, robust demand (like for medical tourism) and attractive opportunities.

Source: IBEF

In addition to the above, rapidly expanding India economy is providing huge opportunities for business tourism. According to the World Bank, India has overtaken Japan to become the world‟s third  largest  economy in  terms  of purchasing power parity (PPP). India holds a 6.4% share of global GDP on a PPP basis. Because of the economic growth, foreign players are interested to establish their operational facilities in the country. Domestic investors have also made huge investments to expand their business. Tourism industry gets benefited from the growing economic environment and investment made by  both  domestic and foreign investors. The  country‟s growing  economic environment acts as one of the major influential driver for tourism growth and development of the country.

What are the challenges faced by the Tourism Sector in India?

Awareness: Despite promotional campaigns by the Government, the awareness regarding India as a tourist destination remains low. Even among domestic tourists, the choice is limited to few popular destinations which remain overcrowded, while many other potential places receive low footfalls of tourists. The information portals and centres are poorly managed. There is lack of promotional campaigns in foreign countries. The absence of online branding campaigns fail to provide information to attract tourists.

Infrastructure and Safety: Many popular destinations lack air connectivity, especially in the hilly regions. Moreover, there is lack of proper hygienic facilities in may places. Lack of cleanliness is off-putting to many tourists. In addition there are safety concerns especially among foreign visitors because of few cases of harassment. Poor experience of some tourists leads to bad word-of-mouth information impacting perception of potential tourists.

Communication: Many tourists face communication problem while in India. This makes them dependent on tourist guides or travel operators to curate their travel in India.

Lack of Skilled Manpower: There is dearth of skilled manpower especially multi-lingual tour guides or hotel staff. The sector is dominated by small unorganized players who can’t spend on skilling their employees or sensitising them to cultural values of the foreign tourists. This impacts tourist experience.

Visa Process: The Government had started the e-visa process (online) which has led to increase in foreign tourists. However, the visa-on-arrival facility is limited to very few countries, limiting foreign tourists.

Currency Fluctuations: Another issue is the fluctuations in the currency exchange rates. The inability to know the value of a currency means that long-range tourism prices are especially hard to predict and the fallout from this monetary instability is already impacting multiple tourism support systems.

Although the coronavirus crisis has short-term destructive effects on the tourism industry, it is challenging the practices of the tourism industry and is drawing attention to a succession of issues like poor risk management in the travel industry, viral globalization, and travel of diseases with tourists to cross borders.

What steps have been taken for the development of Tourism Sector in India?

Infrastructure: The Government has been increasing investments in strengthening of the country’s road and rail networks and promoting port development is a significant driver for the growth of the Tourism sector. The Adarsh Station Scheme is helping modernize railway stations, while the Regional Connectivity Scheme – UDAN (Ude Desh ka Aam Nagrik), is helping make air travel more economical and widespread to hitherto unserved routes. The Swadesh Darshan and PRASHAD schemes aim to stimulate growth in niche tourism segments such as religious, heritage, wellness, medical, adventure, MICE, wildlife etc. Under the Swadesh Darshan Scheme, the Government has launched several theme based circuits like Buddhist circuit which covers destinations associated with the life of Lord Buddha.

Promotional Campaign: Promotional activities such as the Incredible India 2.0 campaign focuses on niche tourism products including yoga, wellness, luxury, cuisine wildlife among others. “Find the Incredible You” Campaign focuses on the promotion of niche tourism products of the Country on digital and social media.

Information Helpline: The government has introduced the concept of e-tourist and e-medical visas which has helped increase inbound tourists to the country. Additional initiatives such as Atithi Devo Bhava, a 24×7 multi-lingual Tourist Helpline, among others have helped improve the safety and security of tourists. On a pilot basis, an ‘Incredible India Helpline’ has been set up to guide the tourists.

Safety: The Ministry of Tourism has adopted a code of conduct for safe tourism, which contains a set of guidelines to encourage tourism activities to be undertaken with respect to basic rights like dignity, and  safety of both tourists and local residents, in particular women and children.

Investment: The government allows 100% Foreign Direct Investment in the Travel and Tourism sector through the automatic route to increase investments across the sector. More recently, the GST rate cut on hotel room tariffs across the board has been a positive move for the industry and is expected to boost the sector’s competitiveness globally.

Cleanliness and Hygiene: Major cleanliness campaign has been launched under the Swachh Bharat movement for protecting and preserving the sanctity of monuments of national heritage. The Ministry of Tourism has also launched awareness campaign to ensure cleanliness of surroundings and help create a Swachh Bharat, Swachh Smarak.

Assistance to States: Financial assistance to states, including places of religious importance, for various tourism projects in consultation with them subject to availability of funds, inter-se priority, liquidation of pending utilisation certificates and adherence to the scheme guidelines.

Digital Database: In September 2021, the Government launched NIDHI 2.0 (National Integrated Database of Hospitality Industry), a scheme which will maintain a hospitality database comprising accommodation units, travel agents, tour operators and others. NIDHI 2.0 will facilitate digitalisation of the tourism sector by encouraging hotels to register themselves on the platform.

Skilling: The Ministry of Tourism has introduced the Incredible India Tourist Facilitator (IITF) and Incredible India Tourist Guide (IITG) Certification Programme to create an online learning platform of well-trained tourist facilitators and guides across the country.

The Ministry of Tourism had launched an initiative called SAATHI (System for Assessment, Awareness & Training for Hospitality Industry) by partnering with the Quality Council of India (QCI) in October 2020. The initiative was focused on effective implementation of guidelines/SOPs issued with reference to COVID-19 for safe operations of hotels, restaurants, and other units.

What more steps can be taken going ahead?

First, The government should continue to promote India’s diversity and rich heritage to re-establish its position as a tourist paradise. The promotional campaigns should target both domestic and foreign tourists. Similarly, the extent of theme-based tourist circuits can be expanded.

Second, the skilling initiatives should be scaled-up. Tourism sector has a potential to provide lot of livelihood opportunities in smaller cities/towns (below tier-2 level). It can help address the issue of jobless growth.

Third, there is need to balance the promotion of tourism with safeguarding the physical, social, and cultural environment in the destination areas. The government should also promote green and sustainable tourism to tackle issues relating to water crisis, pollution, waste management, etc.

Fourth, the Government should further reform the tourist visa norms and processes to facilitate tourism. The Government should also explore the possibility of expanding the visa-on-arrival facility.

Fifth, the focus should also be on supporting and promoting the emerging segments of tourism.

Source: IBEF. Emerging Segments of Tourism.

Conclusion

The tourism sector in India is gradually recovering from the impact of the pandemic. Even during the pandemic, the sector had shown resilience by adapting its operations to ensure safe practices and social distancing. The sector has huge untapped potential in India. The multiplier effect associated with the tourism sector can help raise the income levels and ensure inclusive growth. A burgeoning tourism industry can prove to be vital in ensuring India’s transition to a high income economy.

Syllabus: GS III, Indian Economy and issues related to growth.

Source: The Hindu, Hindustan Times, IBEF