Tourism and Hospitality

Summary
  • The Tourism and Hospitality industry in India is one of the largest service industries. Tourism is an integral pillar of the Make in India programme.
  • Tourism has one of the highest job-creating potentials across all sectors.
  • India is the 8th largest country in terms of contribution to travel & tourism GDP. 1
  • The Tourism industry in India generated USD 247.3 Bn showing a growth of 6.7% during the year 2018, accounting for 9.2% of the total economy.2
  • The World Heritage List has 38 sites inscribed which include 30 cultural, 7 natural and 1 mixed category site. There are 3686 monuments/sites under the protection of the Archaeological Survey of India (ASI).4
  • By 2029, the Indian tourism sector is likely to grow at 6.7% per annum and achieve 9.2% of GDP with USD 488 bn.
  • India is the 8th largest country in terms of contribution to travel & tourism GDP in 2018.
  • India has moved from 65th place in 2013 on Travel & Tourism Competitiveness Index to 34th place in 2019.
Reasons to Invest
  • Tourism is the third largest foreign exchange earner for the country. The Foreign Exchange Earnings (FEE), from the Tourism industry in India, stood at USD 28.585 Bn in 2018. 
  • Globally, India is also the 3rd largest in terms of investment in travel & tourism with an investment of USD 45.7 Bn in 2018.6
  • India has a diverse portfolio of niche tourism products which includes cruises, adventure, medical, wellness, sports such as Golf and Polo, MICE (meetings, incentives, conferencing, exhibitions), eco-tourism, film, rural and religious tourism.
  • Hotels with a project cost of USD 29.85 Mn or above are already included in the Harmonized Master List (HML) of Infrastructure. The MoF (Ministry of Finance) is constantly being pursued for the inclusion of Hotels with a project cost of USD 3.7 Mn to USD 29.85 Mn in the HML.7
  • The centrally funded scheme of Swadesh Darshan and Pilgrimage Rejuvenation and Spirituality Augmentation Drive (PRASAD) provide for introducing suitable Public Private Partnership (PPP) for improved sustainability of the projects. Viability Gap Funding may be provided under the schemes in accordance with the relevant guidelines/instructions of the Government.

 

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Recent Announcements

26th August 2021: Ministry of Tourism started three-day mega tourism event “Ladakh: New Start, New Goals” begins at Leh.

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20th August 2021: PM Modi's addressed at the inauguration and laid of the foundation stone of multiple projects in Gujarat

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17th August 2021: Ministry of Tourism Signs MOUs with MakeMyTrip(India) Private Limited and Ibibo Group Private Limited to strengthen hospitality and tourism industry in the country especially in pandemic times.

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14th August 2021: Ministry of Tourism in collaboration with the Association of Indian Universities (AIU) marked that students and youth must take out at least 75 hours in the next one year and involve themselves in nation-building.

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13th August 2021: Ministry of Tourism organises the IBSA (India, Brazil and South Africa) Tourism Ministers’ to promote domestic tourism.

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Statistics
  • In 2019, the industry contributed USD 194 bn to the Indian economy and created about 40 mn jobs, which is 8% of its total employment.
  • The Tourism industry in India is the 3rd largest foreign exchange earner after gems, jewellery and readymade garments.
  • India ranks 14th in terms of absolute Foreign Exchange Earnings (FEE) and 122nd in terms of share of visitor exports in total export.8
  • Foreign Exchange Earnings (FEEs) during 2019 were US$29.962 Bn (Provisional estimates) with a growth of 4.8% from the previous year.29
  • Foreign Tourist Arrivals (FTAs) during 2019 were 10.89 Mn (Provisional) with a growth of 3.2% from the previous year.29
  • The cumulative FDI equity inflow in the Hotel and Tourism industry in India is USD 15.28 Bn during the period April 2000 to March 2020. 27
Growth Drivers
  • The Government of India has recently been focusing upon fast-track infrastructure development and promoting tourism digitally.
  • Sustained efforts have led to a jump of 31 places in the World Economic Forum Travel & Tourism Competitiveness Index ranking between 2013 and 2019.10 India has shown the maximum improvement among the top 25% of all countries ranked, since the year 2017.
  • The key initiatives undertaken are:
    • E-visa facility extended to 171 Countries under 5 sub-categories i.e ‘e-Tourist visa’, ’eBusiness visa’, ‘e-medical visa’, ‘e-Medical Attendant Visa’ and ‘e-Conference Visa’.The e-Visa is valid for entry through 28 designated Airports and 5 designated seaports.32
    • In 2020, a total of 8.38 mn foreign tourists arrived on e-Tourist Visa registering a growth of 67.2%. 32
    • Undertaken promotional activities such as Incredible India 2.0 campaign and India Tourism Martin 2018.
    • Ministry of Tourism has sanctioned 03 projects for total amount of INR 179.68 cr under Swadesh Darshan scheme.

    • In PRASHAD scheme, 51 sites have been identified at present in 28 States for development. The inception of the scheme has INR 8400.2 Mn (USD 114.95 Mn) sanctioned for 28 projects in 17 States with a total release of INR 5051.5 Mn (USD 69.12 Mn ) till 31.12.2019.29

    • India’s first ‘Adventure Tourism Guidelines’ launched covering 29 land, air and water-based activities.
    • ‘Swachh Paryatan Mobile App’ & 24x7 Tourist Helpline launched in 12 international languages.
    • The Ministry of Tourism has been complemented by progressive initiatives by other ministries, such as UDAN scheme by the Ministry of Civil Aviation, tourist trains by the Ministry of Railways, Sagarmala project and development of lighthouses by the Ministry of Shipping.
    • The traditional themes of culture & heritage, religious and nature-based Tourism are still the frontrunners shaping the inbound tourism landscape in India. Rich history & vibrant culture, deeply entrenched faith in religion and unparalleled diversity in natural resources present a distinct advantage to India.12
    • Availability of medical experts offering speciality treatment, advanced equipment and low cost have positioned India as a preferred medical tourism destination in several international markets.
    • Adventure tourism is another rapidly growing segment which has a tremendous potential based on the diverse natural landscape on offer in India.13
    • Ministry of Tourism set up a portal ‘Stranded in India’ with a view to facilitate and extend support to foreign tourists The portal helped tourists get information/details of State /UT Tourism Departments and Regional Offices.
FDI Policy
  • 100% FDI is allowed under the automatic route in the Tourism and hospitality industry in India, subject to applicable regulations and laws.
  • 100% FDI allowed in tourism construction projects, including the development of hotels, resorts and recreational facilities.
  • The cumulative FDI equity inflow in the Hotel and Tourism industry is USD 15,891.19 mn during the period April 2000 to June 2020. This constitutes 2.90% of the total FDI inflow received across sectors.27

 

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Sector Policy

NATIONAL TOURISM POLICY 

  • A National Tourism Policy was formulated in 2002. However, considering the widespread interrelated global advancements, a new draft National Tourism Policy has been formulated, which is yet to be approved and has the following salient features:14
    • The focus of the Policy is on employment generation and community participation.
    • Stress on the development of tourism in a sustainable and responsible manner.
    • An all-encompassing Policy involving linkages with various Ministries, Departments, States/Union Territories and Stakeholders.
    • The Policy enshrines the vision of developing and positioning India as a “MUST EXPERIENCE” and “MUST RE-VISIT” destination for global travellers, whilst encouraging Indians to explore their own country.
    • To develop and promote varied tourism products including the rich culture and heritage of the country, as well as niche products such as medical &wellness, MICE (meetings, incentives, conferences and exhibitions, Adventure, Wildlife and so on.
    • Development of core infrastructure (airways, railways, roadways, waterways, etc.) as well as Tourism Infrastructure.
    • Developing quality human resources in the Tourism and Hospitality industry in India, across the spectrum of vocational to professional skills development and opportunity creation.
    • Creating and enabling an environment for investment in tourism and tourism-related infrastructure.
    • Emphasis on technology-enabled development in tourism.
    • Focus on domestic tourism as a major driver of tourism growth.15

Domestic Tourism:

  • Dekho Apna Desh Webinars.
  • Ek Bharat Shrestha Bharat: various activities like roadshows, Fam trips, B2B Meetings, Quiz programmes, webinars between paired States / UTs to promote Ek Bharat Shrestha Bharat.
  • Aerial photography of key cities and cultural assets (Delhi, Chennai, Kolkata, Mumbai, Bengaluru, Udupi, Aurangabad, Iconic Tourist sites) across the country during the lockdown.
  • Regular consultations with industry stakeholders on issues related to opening up of Tourism sector.
  • Handling of tourists, protocols of safety and security, services standards etc.
  • Domestic Tourism Promotion Campaign through Webinars, social media and other digital platforms.
  • Dekho Apna Desh Campaign has been the mainstay of Domestic Promotion. The main focus is to rebuild the trust of the domestic & international travellers in terms of India being safe destination to travel in post Covid Scenario.

 

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Financial Support

KEY PROVISIONS OF BUDGET:

  • Allocation of USD 333.33 Mn (INR. 2500 crore) for 2020-21 for tourism promotion.25
  • To develop and enhance tourist infrastructure a provision of USD 158 Mn is made for developing Swadesh Darshan.16 States have been given greater flexibility in the development of Tourist infrastructure as per local requirement from their enhanced resources
  • A host of benefits have been provided under the GST regime. Extremely low taxes on food and hotel rooms have been very beneficial. GST is proving to be a major benefit for the tourism and hospitality industry. The process to claim and avail ITC (input tax credit) is simple and clear.17 
  • Resources to be provided to start work along landscape restoration, signage and interpretation centres, parking, access for the differently abled, visitors amenities, including securities and toilets, illumination and plans for benefiting communities around them at various heritage sites which include Churches & Convents of Old Goa, Hampi, Karnataka, Elephanta Caves, Mumbai, Kumbalgarh and other hill forts of Rajasthan, Rani ki Vav, Patan, Gujarat, Leh Palace, Ladakh, J&K, Varanasi Temple town, UP, Jalianwala Bagh, Amritsar, Punjab and Qutub Shahi Tombs, Hyderabad, Telangana
  • The e-Tourist Visa facility has now been increased for travellers of 166 countries.18

TAX INCENTIVES:

  • An investment-linked deduction under Section 35 AD of the Income Tax Act is in place for establishing new hotels in the 2-star category and above across India, thus permitting a 100% deduction in respect of the whole or any expenditure of a capital nature excluding land, goodwill and financial instruments incurred.

STATE INCENTIVES:

  • Incentives offered by state governments include subsidised land cost, relaxation in stamp duty, exemption on sale/lease of land, power tariff incentives, concessional rate of interest on loans, investment subsidies/tax incentives, backward areas subsidies and special incentive packages for mega projects.
  • Incentives are provided for setting up projects in special areas – the North-east, Jammu & Kashmir, Himachal Pradesh and Uttarakhand.

INCENTIVES FROM THE MINISTRY OF TOURISM:

  •  Assistance in large revenue-generating projects
  • Support for Public-Private Partnerships (PPPs) in infrastructure development such as viability gap funding
  • Schemes for capacity-building of service providers
Investment Opportunities

TOURISM:

  • The presence of world-class hospitals and skilled medical professionals make India a preferred destination for medical tourism.
  • As an opportunity for cruise owners and operators by capturing/capitalizing the opportunity from a vast beautiful coast line, vast forest and undisturbed idyllic islands.
  • Rural tourism is mainly promoted by the Incredible India 2.0 Campaign.19
  • The Ministry of Tourism has sanctioned Rural Tourism projects at 185 sites in several states/union territory administrations up to 31 March 2012.20
  • Under Swadesh Darshan Scheme, Ministry of Tourism identified Rural & Coastal Circuits as one of the thematic circuits for development.
  • Eco-tourism is at a nascent stage, but there are conscious efforts to save the fragile Himalayan eco-system and the culture and heritage of indigenous people.
  • Ministry of Tourism has identified “Eco Circuit” as one of the 15 thematic circuits under Swadesh Darshan Scheme
  • The Tourism and hospitality industry in India offers opportunities across various sub-segments such as timeshare resorts, convention centres, motels, heritage hotels . Investment opportunities in the setting up of tour operations and travel agencies cater to burgeoning tourist inflow.

 

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Foreign Investors
  • Accor (France)
  • The Four Seasons Group (Canada)
  • Thomas Cook (UK)
  • Marriott Hotels (USA)
  • Expedia (USA)
  • Premier Travel Inn (UK)
  • Cox & Kings (UK)
  • Hyatt Hotels Corporation (USA)
  • Airbnb (USA)
Agencies
Key Achievements
  • Swadesh Darshan launched - 15 theme-based tourist circuits identified, 5 pan-India mega circuits identified, 77 projects worth USD 880 Mn underway.22
  • PRASHAD launched – 57 sites in 29 states/UTs identified, 224 projects worth INR 1147.8 mn underway during Jan-Dec 2020.23 
  • India’s ranking in the Travel and Tourism Competitive Index (TTCI) of the World Economic Forum moved up by 6 positions from 40th position in 2017 to 34th position in 2019.23 
  • Adopt a Heritage, Apni Darohar, Apni Pehchan - Under this Mission, 27 Memorandum of Understanding (MoUs) has been awarded to12 Monuments Mitras for twenty-five sites and two Technological interventions across India.23 
  • The Global Medical Tourism Market was worth USD 19.7 Billion in 2016 and estimated to be growing at a CAGR of 18.8 %, to reach USD 46.6 Billion by 2021.23 
  • ‘Dekho Apna Desh’: The Ministry of Tourism launched the ‘Dekho Apna Desh’ initiative in January 2020 with the objective of creating awareness among the citizens about the rich heritage and culture of the country and encourage citizens to travel within the country.
  • The tourism sector provides 12.95% of direct and indirect jobs in India during 2018-19 and given immense economic opportunities for the local communities, especially for women entrepreneurs.31 
Sources
  1. Federation of Indian Chambers of Commerce and Industry, India Inbound Tourism Unlocking the Opportunity, http://ficci.in/spdocument/23082/India-Inbound-Tourism-Knowledge-Paper-ficci.pdf 
  2. Federation of Indian Chambers of Commerce and Industry, India Inbound Tourism Unlocking the Opportunity, http://ficci.in/spdocument/23082/India-Inbound-Tourism-Knowledge-Paper-ficci.pdf 
  3. India Tourism Statistics 2019, Ministry of Tourism, http://tourism.gov.in/sites/default/files/Other/India%20Tourism%20Statistics%202019.pdf
  4. "36 sites from India inscribed on World Heritage List: Dr Mahesh Sharma", Ministry of Culture, PIB, https://pib.gov.in/PressReleasePage.aspx?PRID=152593 
  5. Federation of Indian Chambers of Commerce and Industry, India Inbound Tourism Unlocking the Opportunity, http://ficci.in/spdocument/23082/India-Inbound-Tourism-Knowledge-Paper-ficci.pdf 
  6. The Times of India, Hotel projects over Rs 50 crore likely to get infra status, https://timesofindia.indiatimes.com/business/india-business/hotel-projects-over-rs-50-crore-likely-to-get-infra-status/articleshow/63358545.cms
  7. Federation of Indian Chambers of Commerce and Industry, India Inbound Tourism Unlocking the Opportunity, http://ficci.in/spdocument/23082/India-Inbound-Tourism-Knowledge-Paper-ficci.pdf 
  8. Annual report 2019-20, http://tourism.gov.in/sites/default/files/annualreports/Annual%20Report%20Tourism%202019_20_Final.pdf
  9. The Travel & Tourism Competitiveness Report 2019, World Economic Forum accessed on 12 May 2020, http://www3.weforum.org/docs/WEF_TTCR_2019.pdf
  10. Federation of Indian Chambers of Commerce and Industry, India Inbound Tourism Unlocking the Opportunity, http://ficci.in/spdocument/23082/India-Inbound-Tourism-Knowledge-Paper-ficci.pdf 
  11. Federation of Indian Chambers of Commerce and Industry, India Inbound Tourism Unlocking the Opportunity, http://ficci.in/spdocument/23082/India-Inbound-Tourism-Knowledge-Paper-ficci.pdf 
  12. Federation of Indian Chambers of Commerce and Industry, India Inbound Tourism Unlocking the Opportunity, http://ficci.in/spdocument/23082/India-Inbound-Tourism-Knowledge-Paper-ficci.pdf 
  13. National Tourism Policy, Ministry of Tourism, PIB, http://pibarchive.nic.in/newsite/PrintRelease.aspx?relid=169063 
  14. National Tourism Policy, Ministry of Tourism, PIB, http://pibarchive.nic.in/newsite/PrintRelease.aspx?relid=169063 
  15. Press Information Bureau, Cabinet approves Swadesh Darshan Scheme: Integrated Development of Theme-based Tourist Circuits in the country, http://pib.nic.in/PressReleaseIframePage.aspx?PRID=1565300 
  16. The Institute of Cost Accountants of India, Impact of GST on travel and tourism sector in India, http://icmai.in/TaxationPortal/upload/IDT/Article_GST/82.pdf 
  17. Press Information Bureau – Ministry of Home Affairs, Liberalization of visa regime of India during the last one year, http://www.pib.nic.in/Pressreleaseshare.aspx?PRID=1552720 
  18. "Year-End Review -2017: Ministry of Tourism", PIB, https://pib.gov.in/PressReleseDetail.aspx?PRID=1514505
  19. Schemes for Promotion of Rural Tourism, Ministry of Tourism, PIB, http://pibarchive.nic.in/newsite/PrintRelease.aspx?relid=90052 
  20. Federation of Associations in Indian Tourism & Hospitality, Request for Proposal, https://iato.in/uploads/circulars/RFP.pdf 
  21. Ministry of Tourism, Statistics, http://swadeshdarshan.gov.in 
  22. Ministry of Tourism, Updated list of PRASAD cities, http://tourism.gov.in/sites/default/files/Updated%20list%20of%20PRASAD%20cities.PDF 
  23.  Annual Report 2019-20,  http://tourism.gov.in/sites/default/files/annualreports/Annual%20Report%20Tourism%202019_20_Final.pdf
  24. Expenditure Budget, Ministry of Tourism, https://www.indiabudget.gov.in/doc/eb/sbe98.pdf
  25. Travel & Tourism Competitiveness Index, World Economic Forum, https://reports.weforum.org/travel-and-tourism-competitiveness-report-2019/rankings/
  26. Factsheet on FDI - April 2000 to March 2020Department for Promotion of Industry and Internal Trade, https://dipp.gov.in/sites/default/files/FDI_Factsheet_March20_28May_2020.pdf
  27. Factsheet on FDI - April 2000 to June 2020, Department for Promotion of Industry and Internal Trade, https://dipp.gov.in/sites/default/files/FDI%20Factsheet%20December%2020.pdf
  28. Annual Report 2019-20 http://tourism.gov.in/sites/default/files/2020-02/Annual%20Report%20Tourism%202019_20_Final.pdf
  29. Annual Report 2019-20 http://tourism.gov.in/sites/default/files/2020-02/Annual%20Report%20Tourism%202019_20_Final.pdf
  30. PIB Release, https://pib.gov.in/PressReleseDetail.aspx?PRID=1680657
  31. PIB Release, https://www.pib.gov.in/PressReleasePage.aspx?PRID=1703126
  32. Annual Report.  https://tourism.gov.in/sites/default/files/2021-03/Annual%20Report%202021%2021%20English.pdf

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