As India gets younger, more and more people are getting bitten by the travel bug. The number of people embarking on discovery of India will only grow. The shortage of infrastructure means an entrepreneur or a corporate entity can be part of this. We will assist in making the journey of your plans in the corridors of power a smooth one.
Tourism is the largest service industry in India. It includes heritage, cultural, medical, business and sports tourism. The investment in the sector is expected to rise to nearly Rs 3 lakh crore in 2021. Tourism is a service-oriented sector which not only creates jobs but also earns foreign exchange and revenue for the government. The industry employs a host of service providers in organised as well as unorganised sectors. These include travel agents, tour operators, guides, hotels, guest houses, inns, restaurants and other allied services.
The sector contributes 6.23 per cent to the gross domestic product and 8.78 per cent of the total employment in India. Globally, Indian tourists are among the second-highest spenders after the Chinese. Rising disposable incomes have provided a boost to outbound tourism. The depreciating rupee presents an opportunity for domestic tourism industry to attract Indians who may be having second thoughts about travelling abroad.
The World Travel and Tourism Council has named India among the fastest growing tourism industries over the next 10-15 years. India has also become a cost-efficient medical tourism destination. According to a report, the Indian medical tourism market is expected to log a compound annual growth rate of 27 per cent between 2011 and 2015.
The government has permitted 100 per cent foreign direct investment in the hotel sector through automatic route. Hotel companies with a project cost of Rs 250 crore or more have been allowed to raise up to $3 billion through external commercial borrowings. Tourism sector got a leg up when it was accorded infrastructure status in 2004. This opened access to cheaper long-term funds. The government provides incentives for tour operators who promote domestic tourism. Hospitality providers who plough back 50 percent of profits into tourism infrastructure can avail of income-tax exemptions.
India had earned $17.7 billion from 6.6 million foreign visitors in 2012. The government plans to increase annual tourist numbers by 12 percent and double foreign exchange earnings from tourism by 2016.
According to the Economic Survey 2012-2013, tourism sector needs an urgent image makeover and higher investment in infrastructure, including through the public-private partnership (PPP) route to capitalise on opportunities provided by the growth in world tourist arrivals. Global tourist arrivals are expected to rise by an average 43 million every year between 2010 and 2030. India has a paltry share of 0.64 per cent of world tourist arrivals.
As per 12th Five-Year Plan approach paper, travel and tourism sector is estimated to create 78 jobs per million rupees of investment compared to 45 jobs per million rupees in the manufacturing sector.
India has succeeded in attracting more foreign tourists over the last decade. Infrastructure in the hospitality sector remains a cause for concern besides other drawbacks such as season-based tourism in some states. Infrastructure development is key to sustained growth in the tourism sector. The tourism ministry has made efforts to develop quality infrastructure at tourist destinations and circuits. It has provided financial assistance to states and Union territories. The ministry has identified 53 mega tourism projects which are a mix of culture, heritage, spiritual and eco-tourism.
It has identified 24 destinations and circuits to be covered in the first phase of its initiative. The ministry is working with states for construction and upkeep of amenities along highways and roads leading to tourist destinations, cleanliness at the tourism sites and development of tourism projects in backward areas. Strategic targeting has resulted in increase in private investment, local employment, tourists and growth of SMEs in destinations along the Buddhist circuit and other tourism sites.
The increasing young population and per capita consumption, along with improvements in infrastructure and facilities are likely to translate into more business opportunities. The opportunities in this sector in India include construction of hotels and spas, operating tours and travel circuit, development of specialised tourism circuits such as history, adventure sports, medical, spiritual, beach tourism and eco tourism.
Tourism can stimulate demand for goods and services from other sectors through its forward and backward linkages. These include agriculture, banking, education, health, hospitality, manufacturing and transport. The demand from tourist expenditure generates employment and a multiplier effect on the economy.
(Disclaimer: The information has been aggregated through secondary research. IFIE is not responsible for errors if any)