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India: A Global Tourism Powerhouse

Vision for Tourism Sector Presented to Ministry of Tourism, Govt. of India

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August 2014

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03

Introduction: Key Figures and Statistics

The tourism sector in India has the potential to induce sustainable development at grassroots. With

innovative institutional mechanisms and conducive policy environment, tourism can become the

backbone of our economy.

thAccording to 12 FiveYear Plan, India has

tremendous untapped potential to attract foreign

and domestic tourists, and is well assessed for its

natural resources, cultural resources, air transport

capacity and ground transport infrastructure.

However, India lags behind drastically in some key

parameters like safety and security, health and

hygiene which prove to be detrimental to the

country’s image. As can be seen from the table,

there is still immense ground to cover in terms of

creating a conducive policy and infrastructure for

tourism to flourish.

Increasing Inbound Tourism Share

The Government of India

has an ambitious target of

increasing foreign arrival

growth from the existing 8

per cent to 12 per cent

annual growth by 2017.

Tourism infrastructure and

skilled manpower are major

areas of concern. As per

current estimates, nearly

2.8 million employees are

required for restaurants, 0.3

million for travel and trade

segment and 4.1 million

employees for hote ls ,

creating a shortfall of 2.7 million employees in the tourism sector.

Element Rank

Natural Resources 8

Cultural Resources 24

Air Transport Capacity 39

Ground Transport Infrastructure 43

Health 128

Hygiene 112

Table 1: Tourism Infrastructure Baseline Indicators

(139 countries)

Figure1

Figure2

Source: PHD CHAMBER Tourism Subcommittee

Source: Ministry of Tourism, Government of India

2008 2009 2010 2011 2012

FTA's in India (million) 5.3 5.2 5.8 6.3 6.6

Annual Growth % 4 -2.2 11.8 9.2 4.3

% share of India in Int'l Tourist Arrivals

0.58 0.58 0.61 0.63 0.64

Rank of India in Int'l Tourist Arrival

42 42 41 39 41

-50

510

15

2025

30

3540

45

Comparison of Foreign Tourist Arrivals in India


04

As observed from the

figure3, an important

point to consider while

looking at the tourist

figure growth is also to

look at the purpose of

t r a v e l . I t h a s t o be

observed that while the

t o u r i s t a r r i v a l s a r e

experiencing posit ive

growth, the percentage of

‘pure tourists’, or tourists

coming in for ‘Leisure and

Recreation’ account for

less than onethird of the

total arrivals, the figures

be ing domina ted by

V i s i t i n g F r i e n d s &

Re l a t i v e s ( V FR ) a nd

B u s i n e s s T r a v e l l e r

categories. For Tourism to

aggressively grow as a

sector, it is imperative that

we increase the share of

Leisure Travellers coming

into the country.

Meeting the Demands of Domestic Tourism Industry

While a slew of measures are being undertaken to increase foreign tourist arrivals into the country,

equal attention needs to be given to the Domestic Tourism Segment, which is an important

contributor to the Tourism sector. In 2012. domestic tourists grew by nearly 20% to 1,036 million. In

addition to revenue generation, domestic tourism is a great enabler of sociocultural harmony and

national integration.

With increasing disposable incomes, modernized lifestyles and better life quality, the leisure and

recreation segment in tourism has emerged as the biggest attraction for the domestic tourist in

recent years.

FTA (in Millio

Business Visit

Leisure, Holid

VFR (%)

Medical Trea

Others (%)

Fr

Germ

Ru

Singa

J

C

Rep of K

Aust

ons)

t (%)

day & Recrea�

tment (%)

*Sour

0% 1

USA

rance

many

UK

ussia

apore

apan

China

Korea

tralia

USA

10.3

19.6

on (%) 16.2

46

0.3

18

Purposrce: Bureau of I

10% 20%

FranceGer

y

0.24 0.

26.8 40

36.4 32

18.7 12

0.2 0

17.9 14

e of Visit : FImmigration, In

30% 40%

many

UK

25 0.8

0.3 19.6

2.1 27

2.7 36.6

0.6 0.3

4.3 16.5

Foreign Arrindia, India Tou

50% 60

RussiaSingap

re

1.8 1.3

18.8 24.6

46.6 22.3

6.3 38.7

3.3 0.5

25 13.9

ivals to Indiurism Statistic

0% 70%

poJapan Ch

2.2 1

6 60 6

3 22.4

7 5.1 5

0.1 0

9 12.4 1

iacs 2011- 2012

80% 90%

hinaRep of Korea

1.7 1.1

64.4 49

15 25.3

5.1 5.5

0.1 0.1

15.4 20

100%

Australia

2.02

18.9

25.8

41.6

0.2

13.4

Figure3

Source: Bureau of Immigration, India, India Tourism Statistics 201112


05

Tourism has become source of rejuvenation to the urban middle class city dwellers. With more

studies showing that children are better off with quality time spent in parent’s company, the strata is

becoming more prone to short but multiple holidays. The requirement is evolving around varied

destinations along with affordability and connectivity.

With destinations, interests and economic scenarios constantly evolving, the demography of

domestic tourist is also changing. While religious and social visits will always remain the biggest

reason for domestic travel, now cross cultural exchange between destinations are more common

with Indians realizing the options of tourism products that the sheer geographical and cultural

diversity of India offers.

Leveraging Outbound Tourism

The robust economic growth that the country has observed during the past two decades can be

attr ibuted to the r ise in

number of outbound travellers.

To leverage outbound tourism

South & South East Asian

countries, like Singapore,

Thailand, Malaysia, Nepal and

Sri Lanka are offering travel

packages at highly competitive

price points, often under

cutting domestic packages like

Goa, Kerala, Andaman &

Nicobar and Lakshadweep.

Another interesting aspect to

note here is that while relatively

expensive destinations in

Europe and America are not very attractive to the individual tourist, these are being developed as

MICE Destinations along with Australia and South Africa.

2008 2009 2010 2011 2012

No. of Indian Na�onals Depar�ng from India (million)

10.9 11.07 12.99 13.99 14.92

% change over previous year

11.1 1.8 17.4 7.7 6.7

02468

101214161820

Outbound Tourism Statistics: India*Source: Bureau of Immigration, India , India Tourism Statistics 2008- 2012

Figure4

Source: Bureau of Immigration, India, India Tourism Statistics 200812


06

Overcoming Industry Challenges

Clean India Campaign: Improve Implementation and Stakeholder Participation

The Clean India Campaign has been initiated by the Ministry of Tourism with the objective to increase

tourist arrivals in the country and to improve the quality of services and provide a hygienic

environment in and around tourist destinations across the country.

This campaign aims to provide sufficient drinking water and toilet facilities, ensure cleanliness,

uniform signages in and around the premises, placing of garbage bins, various repair/replacement

work, management and garbage clearance, landscaping, tourist helpdesks and deployment of

volunteers for better management.

While there has been good participation from Public Sector Undertakings like ONGC (which had

adopted six monuments including the Taj Mahal across the country), the role of the private sector,

NGOs and the Travel & Tour fraternity have been limited to the conceptual fringes of the campaign,

with little role in onground activities. This scenario needs to change with greater involvement of the

aforementioned stakeholders.

Some other suggestions to improve the efficacy and delivery of the campaign are as under:

• Public Private Partnerships (PPP) would be an indispensible tool to carry forward the required

infrastructure upgrades, and need an increased policy focus. Rapid development of public

utilities and sanitation facilities are the need of the hour, and a participative approach is the

only way ahead to ensure time bound delivery

• While Tourism and Hospitality institutions can cater to the sectoral perspective and provide

qualified human resource to implement the campaign, academicians, researchers and

students from streams like History, Archaeology, Art & Culture etc. can be the repository of

intellectual capital and an engine of effective dissemination to the tourists


07

Taxation

The tourism industry is overtly burdened with multiple, and sometimes overlapping taxes. Apart

from Service Tax, product operations often entails taxes like entertainment tax, GST , some of which

are an unnecessary burden, and become an entry barrier for potential entrepreneurs. There is an

urgent need to relax tax barriers in the sector. Some specific recommendations on this aspect are as

under.

• Relook at the Service Tax structure on FOREX in Tourism

• Avoid duplication of service tax in intrasector service exchanges, e.g. tour operator to tour

operator, tour operator to transport operator etc.

• Remove taxation on individual components of tour packages if Service Tax on the

consolidated package is being paid.

• CENVAT credit should have abatement option

Visa on Arrival (VoA) and eVisa

The Visa procedures of any country play a major role in determining the tourist footfalls. The

Government, during the past few years, has laudably introduced a slew of new initiatives and

extended the band of countries coming under the VoA regime.

However, if we are to realistically look at achieving the target of 10 per cent growth in FTAs, this band

needs to be extended even further. Through aggressive joint efforts from the MEA, MHA and MoT.

Trained workforce is required to explain rule and procedures, disseminate information and resolve

queries, both for the traveller as well as the industry.

Safety & Security

Safety & security play an important role to make India a global tourism power house. While the

Chamber agrees that we have a long way to go to ensure safety for each and every citizen and guest

of the country, it strongly believes that aggressive and innovative advertising and campaigning, akin

the Incredible India campaign, should be carried out to mitigate the adverse negative perception.


08

Some suggestions by the chamber to improve the safety ecosystem are as under.

• Plans of the Government of India to deploy exservicemen and reintroduction of Tourist

Police needs to be reexamined. The states should be able to fund this with policy guidance

from the Centre.

• ‘Safe and Honourable Tourism’ needs to be promoted through the communities. We can

expect positive change if and only if the community is involved as an active stakeholder.

• More women tourist guides need to be trained

Human Resource and Capacity Creation

In recent years, physical infrastructure has received continuous impetus from the administration

while human resource has proved to be the Achilles’ heel, with lack of sufficient manpower in both

skilled as well as the unskilled space.

There needs to be a three pronged approach collating the industry, academia and administrative

perspectives. A dynamic policy framework is needed, which is not only in sync with the market forces

of demand and supply, but can also focus upon developing the base level skills (communication,

etiquettes etc.) across all segments. An active industryacademia alliance is one way to ensure this,

while constant interaction between the industry and the government can help the policy formulation

process.

• Institutions like IITTM and IHMs need to encourage greater private sector participation to

augment their physical as well as manpower capacity

Infrastructure

While we have rapidly improved as a destination during the last three decades, there is still quite a

substantial short fall in the infrastructural requirements, ranging from public amenities to large

infrastructure like airports and railways.

Attention needs to be paid to high growth rates of medical tourist arrivals into the country and the

need to create a simpler and more welcoming atmosphere for these visitors, ranging from Visa

procedures and other documentation to the onground facilities. An extensive research market and

consumer expectations in this segment is needed.


09

Policy Enrichment, Emerging Avenues and Niches

The Government has identified tourism as one of the sunrise sectors for India which can serve the

dual purpose of not only earning foreign exchange as well as disposable domestic income but also

boosting inclusive growth. Tourism has remained one of the mainstays of Indian economy and acted

as an instrument of economic development and employment generation, particularly in remote and

backward areas. Rich history and cultural and geographical diversity make India internationally

appealing and diverse.

• In the past few years, as visitor numbers have grown in both the domestic and international segments, new niches in Tourism like Adventure Tourism, Agritourism, MICE have emerged, there is an urgent need to a comprehensive development and management framework to ensure last mile benefits are delivered and there is sustainability in growth of these avenues.

• In the initial stages, it is imperative that these niches be classified through short, medium and long term strategies so that appropriate focus on each avenue is given a suitable time period. Market Research and Tourism statistics including Tourism satellite accounts may prove to be effective tools for policy formation at National, Regional and Local levels. International professional agencies may be deployed to collect more realistic data on various tourism parameters.

• Meetings, Incentives, Conventions and Expositions (MICE): Asia is the emerging destination for MICE activities particularly meetings, as almost 19 per cent of total International meetings are shared by Asia while it has only 10 per cent of organizations (i.e. MICE buyers) which have its Headquarters in Asia (International Congress and Convention Association, ICCA).

It indicates that Asia has tremendous potential as a MICE supplier and India may take a leaf out of its

South East Asian counterparts by creating adequate infrastructure to attract more meetings and

exhibitions. Incidentally, Foreign exchange earnings through MICE tourism are more than double as

compared to earning through FTA, estimated to be around Source (YBL).

While both the Government and Industry acknowledge MICE as the next big niche in Tourism, there

is still a lot of untapped potential. There are two major reasons for this, one, while we do have a few

world class convention centres on offer, there is a need to improve accessibility and peripheral

infrastructure and offerings, especially with respect to ‘post conference activities’.


10

Secondly, a dedicated marketing and promotion strategies targeted especially to MICE clientele.

• AgriTourism: Although the Government has acknowledged the importance of indigenous

tourism models as holistic solution to face development challenges, and various schemes

have been launched by both the Ministry of Tourism and the state tourism departments,

there is still a lack of consolidated structure to guide village or community entrepreneurs and

more importantly, build up confidence to make a foray into a relatively uncharted territory.

The current policies are very basic and theoretical in nature, which alienates them from on ground

scenarios, making execution strategies difficult to implement. Now that there are successful models

running in the country, it might prove to be beneficial to revisit the frameworks in their light and

bridge the lacunae.

It is important to note here that agritourism is not just limited to farms or field, but encompasses the

entire cultural experience of the locale, as well as deriving offshoots like adventure activities, unique

products specific tourism like, Tea Tourism.

Agri tourism models are very popular in the United States, where a sizeable chunk of urban

population often conducts functions and festivities in farmhouses; in certain cases the income from

tourism often exceeds farm income.

The Chamber recommends a proactive and ‘bespoke’ approach to agri tourism, with each state

having its own integrated agri tourism policy catering to the specific USPs of the region.

• Community Ownership and Management of Resources: It has been noticed that in many

community based tourism models, apart from basic operations, the other business aspects lie

externally, leading to economic leakages and community antagonism translating to a shorter

destination life cycle. To ensure sustainability in tourism development models, communities

need to evolve as ‘entrepreneurs’, ‘administrators’ and ‘managers’ rather than being just

service providers. While institutional structures are present on the ground in the forms of

cooperatives/ Self Help Groups, there needs to be greater degree of institutionalization to

ensure that these structures gel well with the market/ Tour operators. Each State should have

independent Road Shows abroad.

YES BANK PHDCCI 5point Agenda to Achieve 10 per cent Growth in Foreign

Tourist Arrivals

1. Expand implementation of Clean India Campaign, rapidly develop public utilities and amenities 2. Measures for safety and security of tourists, especially female travellers. Ministry led aggressive

campaign to mitigate the negative perceptions.3. Resolve Taxation Bottlenecks4. Increase the bandwidth of Visa on Arrival (VoA)5. Aggressively promote MICE

PHD Chamber of Commerce and Industry, established in 1905, is a vibrant and proactive

representative organization of business and mercantile community of Northern and Central India.

The Chamber lives by the chosen motto of 'In Community's Life & Part of it'. This apex regional

organization plays a proactive role in India's development and acts as much needed link between

government and industry. It acts as a catalyst for rapid economic development and prosperity of

community in the region through promotion of trade, industry and services. Our focus areas are

Infrastructure, Industry Policy, Education & Skill Development,

Health & Rural Development & Agribusiness. The Chamber caters to the business, economical and

social interests of the 12 States of Bihar, Chhattisgarh, Delhi, Haryana, Himachal Pradesh, Jammu &

Kashmir, Madhya Pradesh, Punjab, Rajasthan, Uttar Pradesh, Uttarakhand, Jharkhand and the Union

Territory of Chandigarh. The Chamber Comprises of over 1600 members as its direct members.

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