Tourism Industry in India – Business Opportunities and Advantages

The Indian tourism industry stands as a robust contributor to the nation's GDP, ranking sixth globally, and a significant employer, securing the second position in travel and tourism employment. With a diverse geographical landscape, it offers world heritage sites, cruise experiences, adventure, medical, and eco-tourism attractions. The sector's growth is fuelled by strategic initiatives, public-private partnerships, and inclusive employment practices, particularly for women. The 'Visit India' year in 2023 highlights the nation's allure, while policies allowing 100% FDI and infrastructure development pave the way for investment and collaboration, underlining India's potential as a tourism powerhouse.

Recent Trends

The Indian tourism sector is experiencing dynamic growth across various dimensions. Infrastructure development is a priority, encompassing destination circuits, resorts, hotels, and facilities. Emerging segments like rural, adventure, medical, pilgrimage, film, and sustainable tourism are gaining prominence. The MICE segment holds a pivotal role in business tourism, while support services, collaboration with tour operators, and recreational amenities enhance the visitor experience. Lighthouse tourism transforms designated sites into attractions, with Gujarat leading the way. Cruise tourism is being expanded with significant investments and projections of 1.2 million visitors by 2030-31. Wellness tourism anticipates a 7.5% growth rate, with the Market Development Assistance scheme extended. Camping sites offer responsible experiences and economic opportunities. Adventure tourism's anticipated growth of 17.4% is diversifying with new offerings. The intercity cab and bus markets are poised to double by FY27. The hotel industry's upward trajectory, projected to reach USD 52 billion by FY27, is noteworthy. Travel agents remain significant players, contributing to the projected USD 125 billion travel market by FY27. The airline sector reflects resilience, with projected passenger counts reaching 400 million by 2027.

Growth Drivers

• Adventure Tourism: Exploiting its varied geography, India is a hub for adventure activities.
• Hotel Growth: Revenue projection for 2023 is USD 7.66 billion, CAGR of 8.29% till 2027, targeting 61.3 million customers.
• Medical & Wellness: 21% of international travellers engage in medical tourism and wellness.
• Eco-Tourism: Predicted growth of 15.7% till 2027, USD 4.55 billion value.
• Cruise Tourism: Passenger traffic set to rise to 4 million by 2032, generating USD 5.5 billion.
• Infrastructure: Over half of tourism budget focused on destination and circuit development.
• MICE Outlook: Initiatives to double MICE tourism in five years.
• Entrepreneurship: Thriving scope with 1,300+ recognized start-ups in tourism.
• FDI Surge: Hotel and tourism FDI at USD 16.61 billion, 2.69% of total FDI.
• Domestic Demand: Rising incomes drive domestic tourism, niche segments further boost demand.
• Anticipated Growth: By 2029, sector expected to reach USD 488 billion, 6.7% growth, 9.2% contribution to the economy.

Why Invest in India?

• Abundant Variety in Attractions
• Promising Prospects
• Government Backing and Support
• Vibrant Market Demand

Indian Tourism & Hospitality Industry Timeline

• Pre-1990s: Before 1990, India's tourism approach transformed with the National Tourism Policy in 1982 and a strategic blueprint in 1988, paving the way for structured development.
• 1990-2000: States recognized tourism as an industry, emphasizing public-private partnerships, policies supporting hotels, and driving economic significance.
• 2000-2005: Infrastructure development was a focus, aided by online travel portals and low-cost airlines, boosting domestic tourism.
• 2015-2020: E-Tourist Visa introduction in 2015 marked accessibility enhancement, positioning India third globally in tourism by 2018, and contributing 8.0% to employment.
• 2020-2022: Tourism generated 39 million jobs in 2020, international engagement in travel fairs showcased diverse offerings and global connections.

Segments of Tourism and Hospitality

• Accommodation
• Travel Agents
• Transportation
• Tourist Attractions

Emerging Segments of Tourism and Hospitality

• Heritage Tourism
• Medical Tourism
• Pilgrimage Tourism
• Luxury Tourism
• Rural Tourism
• Adventure Tourism
• Eco-tourism

Market Insight

India's position in travel and tourism is highlighted by its 54th rank in the Travel and Tourism Development Index (2021) and its contribution of around USD 178 billion to GDP. The industry is set for a robust 6.7% annual growth, aiming to reach USD 488 billion and 9.2% of GDP. In 2022, India's Travel & Tourism GDP contribution growth stood at 5.8%, making it a major player in the global market. The sector is the third-largest foreign exchange earner, with estimates projecting a 2022 GDP contribution surpassing USD 215 billion on its way to USD 488 billion by 2029. Projections show a 7-9% annual GDP contribution growth rate from 2019 to 2030. The 'Namaste India' Campaign and the potential of Medical Tourism indicate proactive efforts. Top source countries for Foreign Tourist Arrivals include Bangladesh, the USA, and the UK. Domestic travel is expected to reach USD 405.8 billion by 2028. The Ministry of Tourism fosters growth through initiatives like the National Conference of State Tourism Ministers and global exhibitions.

Strategies adopted to bring a Boost in the Industry

• "Dekho Apna Desh": Government's initiative to promote domestic tourism with USD 2.11 billion for infrastructure and USD 29.3 million for branding.
• Unity Malls and Railways: Establishing "Unity Malls" to showcase local products, and Bharat Gaurav Deluxe AC Tourist Train to boost domestic tourism.
• Engagement Channels: Ministry uses Adobe solutions for personalized visitor engagement; MakeMyTrip aids offline agents in digitization.
• Spiritual Tourism: PRASHAD Scheme revitalizes spiritual destinations, enhancing heritage and spiritual significance.
• Data Analytics & AI: Data-driven insights for personalized offerings; IRCTC's AI-driven AskDISHA 2.0 addresses queries and bookings.
• Dekho Apna Desh Webinars: Webinars showcase India's culture, heritage, and responsible tourism concepts.
• M-VISA for Medical Tourism: Indian e-Medical Visa introduced, covering 166 countries to facilitate medical tourists.
• SAATHI Initiative: Collaborative program ensures safety and hygiene standards in the hospitality sector.
• Lighthouse Tourism: 78 lighthouses earmarked for tourism hubs; 65 coastal lighthouses transformed through PPP approach.
• One-Stop Solution: "Stranded in India" portal assists foreign tourists with information and resources.

Government Policies and Support

• Market Development Assistance (MDI): Scheme supports domestic tourism through financial aid for promotional activities, travel fairs, road shows, and online promotions.
• SAATHI Initiative: Collaboration with Quality Council of India ensures safety and hygiene standards in the hospitality industry amid the pandemic.
• LGSCATSS: Loan Guarantee Scheme provides financial relief to COVID-affected stakeholders in the tourism service sector.
• NIDHI Scheme: Centralized database aids states in policy formulation, safety measures, and resource allocation.
• PRASHAD Initiative: Revives pilgrimage and heritage sites, backed by substantial funds for tourist circuit development.
• National Tourism Policy 2022: Comprehensive framework for sustainable tourism growth through guiding principles and missions.
• Tax Incentives: Tax deductions encourage hotel investments and reduced GST rates stimulate growth.
• Tourist Police Initiative: National Conference for unified Tourist Police Scheme enhances safety.
• Enhancing Safety Measures: 24x7 multilingual tourist helpline, adventure safety guidelines, and Nirbhaya Fund for women's safety.
• Special Boards & Collaborative Webinars: Hospitality Development Board for project approval, G20 participation, and virtual meetings for international partnerships.
• Bharat Darshan Tourist Train: IRCTC's initiative offers travelers an enriching experience of India's heritage and culture.
• E-tourist Visa: Convenient electronic visa available for citizens of 166 countries at specified airports and seaports.
• Jail Tourism Initiative: Tihar Jail and Yerawada Central Prison open their premises for tourists to explore.

Regulatory Framework

• National and State Policies: Ministry of Tourism sets national policies, states formulate regulations.
• Hotel Standards: State-specific regulations ensure safety, hygiene, and quality in accommodations.
• Travel Agencies: Registration ensures transparency and ethical practices.
• Foreign Exchange Management Act (FEMA): Oversees foreign currency transactions.
• Environmental Laws: Assessments, eco-friendly practices, and sustainable development.
• Archaeological Sites: ASI preserves heritage sites with responsible access.
• Aviation Regulation: DGCA ensures safe and efficient civil aviation operations.
• Taxation and GST: GST impacts pricing for accommodations, restaurants, and travel services.
• Health and Safety: Regulations ensure tourist well-being in food, transportation, and emergencies.
• Online Travel Platforms: IT Act governs e-commerce, data protection, and user rights.
• Labour Laws: Protect workforce rights and conditions in the industry.
• Intellectual Property Rights (IPR): Safeguards branding, copyrights, and cultural knowledge.

Conclusion

The Indian tourism sector embodies a dynamic and diverse industry poised to drive economic growth, cultural exchange, and sustainable development. India's historical heritage, varied landscapes, and cultural richness offer a wide array of experiences for both domestic and international travelers. Government policies like "Incredible India," "Swadesh Darshan," and "Dekho Apna Desh" highlight responsible tourism practices. Collaboration between public and private sectors, coupled with community engagement, is vital for success. Challenges include infrastructure enhancement, environmental sustainability, and skill development. Initiatives like "Tourist Police" and safety norms underscore the commitment to enriching and secure visitor experiences. Embracing technology, data analytics, AI, and digital marketing enhances experiences and global reach. By fostering sustainability and inclusivity, India can emerge as a leading global tourism destination while safeguarding its heritage. The sector's growth can contribute to India's socio-economic progress and international reputation. As the sector evolves, it's a powerful platform to showcase India's traditions, landscapes, and experiences to the world.


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