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Editorial Articles


Volume-1, 6 – 12 April, 2019

Tourism Industry  Key to Faster Economic Growth

Dr. Ranjeet Mehta

The tourism industry of India is economically important and is growing rapidly. It has become the world's fourth largest export industry after fuels, chemicals and food. Specifically, tourism accounts for 6 per cent of the world's total merchandise and service exports that represents 30 per cent of international trade in services. Besides, 9.8 per cent of the world's total gross domestic product (GDP) originates from the tourism sector. The infiuence of inbound tourism on national economies is becoming increasingly important because of the growing size of the tourist market. Inbound tourism stimulates economic growth in numerous ways. For instance, tourism significantly contributes to foreign exchange reserves which help in bringing new technologies for production process. Secondly, tourism stimulates investments in new infrastructure, human capital and increases competition. Thirdly, tourism promotes industrial development through spillover effects and creates jobs and hence stimulates earnings, thereby generating positive economic externalities.

India is one of the fastest growing economies in the world, which implies that its tourism industry can be expected to grow faster in the years to come. There is a large untapped potential in the Indian tourism industry. In fact, UNWTO  noted that India recorded the strongest growth in international tourists arrival during the last decade. India offers myriad options in tourism, for example: 36 world heritage sites and 103 national parks, plus the Taj Mahal in Agra, Rajasthan’s hill forts, the holy city of Varanasi, and everything else in between the mountains of the Himalayas like Uttrakhand, HP, Jammu Kashmir, whole of North East and the beaches of Goa. Add to it the jungles with tigers, elephants, and the last of Asia’s lions, no other country is better suited to take advantage of an adventure travel market that is expected to grow to $1.3 billion by 2023.

Tourism is an important economic activity in most countries around the world and it has  significant indirect and induced impact on economy. Indian Tourism offers  mixture of different cultures, traditions, festivals, and places of interest. There are a lot of options for the tourists. India is a country with rich cultural and traditional diversity.  The different parts of the country offer wide variety of interesting places to visit. The positive economic effects of tourism are seen in the economy such as its contribution to the generation of national income, expansion of employment opportunities, rising of tax revenue, generation of foreign exchange and transformation of regional economy.

It has been noticed that Hotel occupancy levels in India are at their highest levels since 2008, even though many hotel chains have raised prices. The need for rooms has been identified by foreign investors with Japan’s Soft Bank Group backing start-ups like OYO Rooms, which has emerged as the largest aggreg-ator of budget accommodation across the country with hotels in over 200 destinations. One major driver of the domestic tourism boom has been the launch of five regional budget airlines on over 100 routes, which have been given incentives to offer cut-price flights to uncovered and remote areas, encouraging thousands of families to explore flying for the first time. With the result, domestic airlines carried 10.6 million passengers in the first eleven months of 2017, up 17% from the year-ago- encouraging some established players like Spicejet, Jet Airways and Vistara to start flights to new locations.

At the same time, over 9 million foreigners visited India in the first 11 months of 2017, up 15.6% from a year ago.Domestic tourists, who account for 88% of the sector, are increasingly using online portals for hotel and travel bookings. Travel portal Make My Trip reported a 186% jump in hotel bookings during the September quarter and its holiday package segment that includes hotel and flight bookings saw a 71% increase in revenues in 2018 over the same period of 2017.

Major Jobs in Tourism Industry are as follows:-

Airlines

Ground Staff (Traffic Assistant, Counter Staff, Booking & Reservation

Hotels

Operations, Front office, House keeping, Food & Beverage, Accounting,  Maintenance, Security, Sales,  Public Relations

Tourism Departments & Others

Tour planners & Guides, Information Assistants, Reserv-ations and Counter staffs, Sales and Marketing, Interpreters, Travel Agent, Itinerary Planner, Foreign Exchange, Destination Manager

Transportation

Management and operation in all varieties of transport like  Rail/ Cruise/Ferry/Bus/coach/Air etc.

India is a large market for travel and tourism. It offers a diverse portfolio of niche tourism products - cruises, adventure, medical, wellness, sports, Meetings, incentives, con-ferencing, exhibitions (MICE), eco-tourism, film, rural, luxury tourism and religious tourism. India has been recognized as a destination for spiritual tourism for both domestic and inter-national tourists.

In the hotel and tourism sector, 100 per cent FDI is allowed through the automatic route. A five-year tax holiday has been offered for 2, 3 and 4 star category hotels located around UNESCO World Heritage sites (except Delhi and Mumbai). Total FDI received by Indian hotel & tourism sector was US$ 11.39 billion between April 2000 and June 2018. India is a large market for travel and tourism.

Under new visa policy tourists and business visitors are allowed to obtain a "visa on arrival" at sixteen designated international airports, by acquiring an Electronic Travel Authorization (ETA) online before arrival, without having to visit an Indian consulate or visa centre. Later the "visa on arrival" scheme was renamed "e-Tourist Visa" (or "e-TV") to avoid confusion. As a result of the new visa policy, 56,477 tourists arrived on an e-Tourist Visa during October 2015, compared with 2,705 tourist arrivals during October 2014 (just before the facility was introduced), representing a 1987.9% increase. During the period from January to October 2015, a total of 258,182 tourists arrived on an e-Tourist Visa, a 1073.8% increase on the 21,995 tourist arrivals during the same period in 2014 (before the e-Tourist Visa was available).

Several branding and marketing initiatives such as ‘Incredible India!’ and ‘Athiti Devo Bhava’ have provided a focused impetus to growth. Fresh category of visa - the medical visa or M visa, has encouraged medical tourism in the country. The ‘Incredible India Mobile App’ assists the traveller to India and showcases major experiences for travelling. It is hoped that one per cent share in world's international tourist arrivals by 2020 and two per cent share by 2025 shall be achieved.

To conclude, already endowed with incredible natural beauty and a unique cultural heritage and diversity, India must take the advantage of 600,000 villages with their own cultures and heritage, ecotourism and cruise tourism to create unique experiences for travelers. Foreign tourist arrivals for medical purposes increased from 427,014 in 2016 to 495,056 in 2017(P). During January-November 2018, arrivals through e-tourist visa increased 41.50 per cent year-on-year to 2.06 million. As of 2017-18, 81.1 million people are employed in the tourism sector in India which was 12.38 per cent of total employment in the country. Travel and tourism currently accounts for 9.6% of India’s GDP (88% of which comes from domestic travel) and supports 9.3% of the country’s total jobs (or 40.3 million jobs). Today, 12% of India’s tourism GDP is derived from international tourism; it accounts for only 5.4% of the country’s exports, compared to a global average of 6.6%.  India’s vast cultural and natural resources as well as its price competitiveness remain key drivers of its overall competitiveness. To increase and facilitate travel to India, the government has placed significant emphasis on ground transportation and international openness. Stronger visa policies and an e-tourist visa have produced an increase in arrivals from 103,617 in 2015 to 162,250 in 2016, a 56.6% growth.

Thus it has been found that tourism industry in India is growing fast and is expected to do even better in the coming years. In India, the travel industry hopes to create millions of job opportunities in next decade and this is the crucial sector where the government is pinning hopes of providing major employment opportunities by providing skill-based training programs for local youths and also to match the infrastructure to meet the international standards. Why not? India has everything - from over 7,000 km of coastline, and rain forests, deserts and snow-capped mountains to temples, mosques, wildlife, tribal habitation and a multicultural population. With 29 states, 4,000 cities, a rich history and incredible diversity of culture, India's travel and tourism industry has tremendous potential to serve as an engine for economic growth, job creation and development. 

India has one of the five fastest-growing aviation markets in the world. It plans to continue this growth to become the largest market by 2030, with passenger numbers reaching 278 million by 2026 and 442 million by 2035. Unlike many more mature tourist destinations, India has the opportunity to skip the trial-and-error phase many countries have had to undergo, and leapfrog to implement best practices and policies that have worked in other nations to ensure the growth of the travel and tourism industries. India's international arrivals are expected to reach 15.3 million by 2025, according to the World Tourism Organization which will offer numerous job opportunities in tourism Industry. An ambitious target of 20 million foreign tourist arrivals (FTAs) by 2020 and double the foreign exchange earnings as well has been set. Tourism is a key sector to meet the overall objective of the faster economic growth and employment generation.

(Dr. Ranjeet Mehta is Principal Director, PH.D Chamber of Commerce and Industry New Delhi, email ranjeetmehta@ gmail.com)

Views expressed are personal.

(Image Courtesy : Google)