The Economic Impact of India's Travel and Tourism Sector

  • Published | 01 March 2024

India stands as a coveted global tourist haven, boasting a rich cultural tapestry and diverse natural landscapes. In recent years, the country has witnessed a substantial surge in inbound tourism, solidifying its status as a favored destination for international travelers. Despite the pandemic's challenges, India welcomed 6.2 million foreign tourists in 2022, marking an exceptional growth rate of 307.9% compared to 2021's 1.52 million arrivals. Remarkably, the travel and tourism India Travel and Tourism Marketsector contributed 9.2% to India's GDP in 2022, generating 44.6 million jobs, roughly 8.5% of the nation's total employment. This sector's collective impact, encompassing both direct and indirect contributions, soared to USD 426.2 billion in 2022 from USD 178 billion in 2021, fueling the development of multifaceted infrastructure like hotels, transport, and healthcare facilities. Ranked among the top 10 Largest Travel & Tourism Economies globally, India holds the 6th position as per the WTTC Travel & Tourism Economic Impact Report 2022. However, its current 54th ranking in the World Economic Forum's Travel & Tourism Development Index (2021) reflects opportunities for further growth. The top 10 source countries accounted for 56.46% of inbound tourist flows in 2022, including the United States, Bangladesh, United Kingdom, Australia, and Canada. Notably, the introduction of E-Visa has significantly boosted Foreign Tourist Arrivals since its inception in September 2014. The nation's vision for 2047 envisages a USD 1 trillion industry, driving policies to amplify visitation, prolong stays, and elevate spending while diversifying tourism offerings across cultural, adventure, eco, and wellness domains. A strategic focus on connectivity, infrastructure, branding, and cultural showcase underscores India's commitment to harnessing its tourism potential. Flexibility and alignment with evolving consumer preferences remain pivotal for the industry's sustainable competitiveness.

Impact of Tourism

Tourism holds a multi-tiered impact on local economies, delineated into direct, indirect, and induced effects. Direct impact encompasses the GDP generated by tourism-centric entities like hotels, airlines, restaurants, and tourist-focused services. Indirect contributions extend to investment and government spending, encompassing support, promotional activities, and administrative services. Induced impact reflects the economic boost from spending by both directly and indirectly employed individuals in the tourism sector. These impacts can fluctuate among nations based on the integration of tourism-related activities within the local economy. Stronger connections often lead to heightened local economic activity and growth. This occurs when tourism businesses procure goods and services, including labor, locally. Conversely, weaker economic ties arise when tourism enterprises heavily rely on imports, including staffing, to meet their needs.

Govt Initiatives to Promote Tourism in India

The Indian government has launched several initiatives to propel the growth of tourism-related infrastructure across the nation. The Swadesh Darshan Scheme underwent a significant overhaul, now known as Swadesh Darshan 2.0 (SD2.0). This initiative aims to foster sustainable and responsible tourist destinations by adopting a tourist-centric approach. In addition, the National Mission on Pilgrimage Rejuvenation and Spiritual Heritage Augmentation Drive (PRASHAD) Scheme was introduced, focusing on the integrated development of identified pilgrimage sites. Furthermore, a 24x7 toll-free Multilingual Tourist Helpline was established to aid tourists in need. To simplify travel, the government has offered e-Visa services across five sub-categories for nationals of 165 countries, with reduced visa fees and expanded liberalization. Special emphasis has been placed on developing and promoting 'Niche Tourism' products, leveraging India's comparative advantages to attract tourists with specific interests. Efforts to position India as a comprehensive tourism destination are being amplified through extensive promotion on the Ministry's social media platforms and website. Capacity Building for Service Providers (CBSP) programs has been initiated to elevate service standards through enhanced training. Furthermore, the government has opened new mountain peaks for mountaineering and trekking to invigorate adventure tourism. To boost competitiveness, the GST on hotel rooms with tariffs ranging from ₹1,001 to ₹7,500/night has been reduced to 12%, while those above ₹7,501 now stand at 18%. Moreover, in collaboration with the Ministry of Civil Aviation, the Ministry of Tourism has facilitated 59 tourism routes under the RCS UDAN Scheme. Financial support in the form of VGF (Viability Gap Funding) has been extended to identified airlines for 51 operationalized routes, fostering increased connectivity and accessibility across the country.

Impact of G20 Summit on India Travel and Tourism Market

The monumental G20 gatherings held in Delhi, featuring world leaders, have proven to be an extraordinary triumph. Recognized as the world's fastest-growing economy, India is increasingly drawing business travelers. With substantial enhancements in infrastructure, connectivity, and the enhancement of various locales through the G20, India has emerged as an appealing global travel and tourism destination. Under India's G20 Presidency, tourism took center stage, marked by the establishment of four G20 tourism working groups. These groups were dedicated to formulating policies promoting sustainable and inclusive tourism, focusing on themes like green and adventure tourism, digitalization, destination management, skill development, and supporting MSMEs. Collaborative efforts among various states and stakeholders were instrumental in fortifying infrastructure, celebrating cultural heritage, preserving diversity, and driving sustainable development. Preceding the G20 meetings, endeavors were made to restore heritage monuments, upgrade infrastructure, and bolster connectivity. These initiatives spanned transportation, lodging, and conference facilities, with airlines planning to expand their fleets and introduce direct flights to previously unconnected destinations. Delhi, post the recent G20 meetings, presents a transformed experience owing to these comprehensive efforts. The Ministry of Tourism designated 2023 as the 'Visit India' year, organizing over 220 meetings in more than 60 cities, including non-metro cities like Udaipur, Guwahati, Indore, Jodhpur, Surat, and Thiruvananthapuram. This move has already sparked a surge in hotel bookings, indicating increased tourist footfall. Notably, foreign tourist arrivals surged by 166% in the first four months of 2023 compared to 2022, highlighting the heightened interest. The hospitality sector experienced a significant upswing during the G20 period, with a four-fold increase in average daily rates for hotel rooms. Travel agencies witnessed heightened demand for tour guides in cities hosting the G20 meetings. The substantial enhancements in infrastructure and global attention on India are expected to sustain tourism growth post the summit. India's tourism momentum is anticipated to persist beyond the G20 handover to Brazil and South Africa in subsequent years, signifying a continued focus on these regions and bolstering tourism as a whole. Ultimately, the G20 summit has acted as a catalyst, providing a substantial boost to tourism in India.

Top Tourist Destinations in India

Explore India's vibrant tourist landscape that beckons travelers from across the globe. In 2021, the country hosted a mosaic of visitors: 6.77 million Foreign Tourist Arrivals (FTAs), 6.87 million returning Non-Resident Indians (NRIs), and 6.98 million International Tourist Arrivals (ITAs). The subsequent year, 2022, while witnessing a slight decline in Foreign Tourist Arrivals to 6.33 million, maintained steady figures for NRIs and ITAs at 7.00 million and 6.98 million, respectively. Diving deeper into these arrivals, the Bureau of Immigration spotlighted key contributors to India's tourism tapestry in 2022. The United States led with 13.7 lakh arrivals (22.19%), trailed closely by Bangladesh with 12.6 lakh arrivals (20.29%), the United Kingdom at 6.2 lakh arrivals (9.98%), Australia with 3.7 lakh arrivals (5.96%), and Canada recording 2.8 lakh arrivals (4.48%).

Shifting the focus to domestic tourism, Uttar Pradesh emerged as a frontrunner in 2022, hosting a substantial 317.91 million visits, constituting 18.37% of the country's total domestic tourist footfall. Tamil Nadu closely followed with 218.58 million visits (12.63%), while Andhra Pradesh secured third place with 192.72 million visits (11.13%). Karnataka, Gujarat, Maharashtra, and Rajasthan prominently featured, drawing 182.41 million, 135.81 million, 111.30 million, and 108.33 million visits, respectively. West Bengal, Telangana, and Uttarakhand trailed behind with 84.54 million, 60.75 million, and 54.64 million visits, collectively contributing to a significant 84.75% of all domestic tourist visits in the country.

Additionally, India's rich cultural heritage attracted domestic explorers to its top archaeological marvels. The Taj Mahal magnetized the most footfall at 45.13 lakhs, trailed by the Red Fort (22.01 lakhs) and the Sun Temple in Konark (21.33 lakhs). Notable sites like Agra Fort, Qutub Minar, and Golkonda Fort drew substantial visitor counts, while the Group of Monuments in Mamallapuram, Ellora Caves, Tomb of Rabis Durani (Bibi ka Maqbara), and Humayun's Tomb rounded up the list, captivating scores of inquisitive travelers during the Financial Year 2022-23.

Ayodhya: An Emerging Travel Destination in India

Ayodhya's evolution into a prominent travel destination is underpinned by significant revitalization efforts. Triggered by the Supreme Court's declaration of an ancient Ram Temple in 2019, Ayodhya's redevelopment has taken flight, driven by the government's vision to surpass Mecca and Vatican's annual footfall. This city of sacred importance is meticulously restructured and readied to accommodate a projected influx of pilgrims and tourists, thoughtfully ensuring infrastructure matches anticipated demand. The city's master plan preserves its essence while gearing up for massive footfall. The Janam-Bhoomi temple complex's construction, the symbolic heart of Ayodhya, progresses, scheduled for a partial opening on January 22, 2024. Roads leading to key sites are widened, aesthetically enhanced, alongside rejuvenated public spaces and riverfronts. Notably, Ayodhya boasts a new international airport, upgraded railway station, and burgeoning hospitality infrastructure with renowned hotel chains. Additionally, the government fosters entertainment avenues like the Ramayana Spiritual Forest and a globally acclaimed 'Deepotsav' event, aiming for record-breaking participation. Public-private partnerships drive entertainment development, enhancing the city's allure for tourists. Investments pour in as Ayodhya emerges as a transformative tourism hub, attracting global attention. Tour operators seize the moment, weaving Ayodhya into itineraries, presenting its spiritual ethos and Hindu heritage. Ayodhya stands as an upcoming spiritual haven, distinct from other destinations in Uttar Pradesh, offering a unique blend of history, spirituality, and connectivity to adjacent tourist hotspots like Lucknow, Varanasi, and Prayagraj

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