Tourism and Hospitality

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OVERVIEW

India is one of most preferred tourism destinations in the world. It ranks 3rd in the Travel and Tourism Ranking by World Travel and Tourism Council (WTTC), which assesses 185 countries on the basis of four key parameters of total travel and tourism GDP, foreign visitor spending, domestic spending, and travel and tourism capital investment. India’s rank in the World Tourism Index by World Economic Forum has also jumped from 65th rank in 2013 to 34th rank in 2019. Tourism contributes more than 12 percent to the total employment in the country.

Hospitality industry in India covers a spectrum of establishments from accommodation to wellness and food and drinks to medical services. The Indian hospitality sector is the replicated belief of “Atithi Devo Bhava”- a philosophy of treating guests with the same respect as God.

Facilitative visa regime is a pre-requisite for increasing inbound tourism. Constant efforts by the Government towards digitalization of tourism services in the form of easing visa regimes has rendered growth of 23.6 percent in FTAs on e-tourist visa during 2019 as compared to 2018.

The number of foreign tourist arrivals (FTAs) in India registered growth of 3.2 percent from 10.5 million in 2018 to 10.8 million in 2019. However, the FTAs registered steep decline of (-)22.5 percent during January- March 2020 as compared to corresponding period of the previous year, due to countrywide lockdown caused by Covid- 19 pandemic in India as well several economies of the world. The FTAs registered a CAGR of 7 percent during 2014-2019.

Year 2014 2015 2016 2017 2018 2019 % CAGR
(2014-19)
FTAs 7.7 8.8 9.7 10 10.6 10.8 7
Source: Ministry of Tourism, PIB, Exim Bank Research

Foreign exchange earnings from tourism were almost US$ 30 billion and registered growth of 4.8 percent in 2019, as compared to the previous year. During 2014-2019, the FEE from tourism registered CAGRof 8.7 percent.

Trends in Foreign Exchange Earning from Tourism in India

Year 2014 2015 2016 2017 2018 2019 % CAGR
(2014-19)
FEE (US$ Billion) 19.7 21.01 22.9 27.3 28.6 30 8.7
Source: Ministry of Tourism, PIB, Exim Bank Research

FDI of upto 100 percent is allowed under the automatic route in tourism and hospitality, subject to applicable regulations and laws. FDI of upto 100 percent is also allowed in tourism construction projects, including the development of hotels, resorts and recreational facilities.

According to Department of Industrial Policy and Promotion (DIPP), tourism and hospitality sector attracted FDI of US$ 15.28 billion during April 2000- March 2020, accounting for 3.25 of the total FDI inflows into the country.

The Covid-19 pandemic disruptions due to travel restrictions and country-wide lockdown have brought the entire tourism industry to a standstill, and unlike other sectors, the tourism sector is expected to recover slowly, especially leisure tourism. This will have a direct impact on states/UTs like Uttarakhand, Rajasthan, Kerala, Himachal Pradesh, Goa, Sikkim and other north eastern states where tourism is the key source of revenue to the state. Revised OECD estimates on the Covid-19 impact point to 60 percent decline in international tourism in 2020. This could rise to 80 percent if recovery is delayed until December. However, with the upliftment of lockdown, the tourism sector of India is likely to grow at a faster pace, as a result of opening of economy after a long lockdown. The outlook for the industry is positive in the medium term.

 

GOVERNMENT INITIATIVES

  • Swadesh Darshan scheme is one of the flagship schemes of the Ministry of tourism, for development of thematic circuits in the country in a planned and prioritized manner. Under the scheme, the Ministry has sanctioned 77 projects worth ₹ 84.02 Crore to 31 States and UTs. There are 13 tourism circuits that have been identified so far and a few proposed tourist circuit by Walk Through India such as Shiva Temple Circuit, North East India Circuit, Buddhist Circuit, Himalayan Circuit, Coastal Circuit, Jain Circuit, Krishna Circuit, Desert, Tribal Circuit, Eco Circuit, Gurdwara Circuit, Adventure tourism Circuit and Cruise tourism.
  • The Government has substantially reduced the visa fee on e-visa to increase tourism competitiveness of the country. New visa rates effective since April 2019 are as under:
    • 30 days e-TV (April-June) - US$ 10/-
    • 30 days e-TV (July -March) - US$ 25/-
    • 1-year e-TV - US$ 40/-
    • 5-years e-TV - US$ 80/-
  • To increase India’s competitiveness as a tourism destination vis-à-vis other competing markets in the region, the Government has reduced GST on hotel rooms with tariffs of ₹1,001 to ₹7,500/night to 12 percent and above ₹7,501 to 18 percent.
  • Ministry of Tourism has launched ‘Incredible India Tourist Facilitators Certification’ (IITFC) programme. The certification programme is an Online Learning Management System which aims at creating skilled manpower to work as tourist facilitators. The programme helps local citizens in harnessing the local experience and traditional knowledge for assisting tourists and to be a potential source of income for their households.