“One of the source markets to watch is Russia. In 2009, that country was not among India’s top ten but by 2014, Russia had become India’s fifth-largest inbound market, totalling 269,832 arrivals. Half of the Russian tourists headed for Goa, accounting for 29.14% of visitors to that state.”
In 2014, India attracted 7.68 million foreign tourists – almost 2 million more than in 2010, an increase attributed to more visitors from India’s ‘traditional’ markets such as the US and the UK and a rise in the number of tourists from ‘new’ markets such as Russia (see above) and China.
An increase in the number of arrivals has been matched by a rise in revenues. In 2014, according to the Ministry of Tourism, international tourism generated US$20.24 billion in foreign exchange – US$6.04 billion more than in 2010.
The big story however, is domestic travel. This sector has expanded at a phenomenal rate – rising from 368.27 million domestic tourist arrivals in 2004 to 1.3 billion a mere decade later. Among Indians who holiday at home, visiting religious sites and attending festivals are among the most popular activities but an expanding middle class means that many are travelling simply for leisure. In 2014, the Bureau of Immigration found that 18.33 million Indians also travelled abroad.
The travel and tourism economy is a significant contributor to the employment sector and India’s gross domestic product (GDP) (it totalled US$2.06 trillion in 2014). In 2014, the travel and tourism economy accounted for 6.7% of the country’s GDP and 8.7% of employment, representing over 37.3 million jobs (direct and indirect).
The new government, headed by Prime Minister Modi, is upgrading airports, seaports and roads (a process started by the previous regime), gearing up for a predicted rise in the number of foreign and domestic travellers in the years to come.
The number of people travelling by air has already increased substantially, boosted by new Indian carriers such as IndiGo, SpiceJet, Vistara and Air Pegasus. In fiscal year 2009/10, India’s airports handled 118.9 million domestic and international passengers but by fiscal year 2013/14, that figure had risen by 50 million to a total of 169 million domestic and international passengers.
In spite of economic reforms, India continues to grapple with outdated labour laws, a stultifying bureaucracy, endemic corruption and obstructive land ownership rules. However, compared to some other sectors of the economy, tourism continues to perform relatively well.
The Modi government recently introduced legislation to allow foreigners 100% ownership of tourism infrastructure (such as hotels and recreational facilities) to encourage investment from at home and abroad.
This report looks at the following areas:
What are the constraints to economic growth and how is the government dealing with them?
Why is investment in the hotel sector not more robust?
What has accounted for the huge growth of domestic tourism?
What is the weak link in India’s transport network?
