India’s inbound tourism has grown phenomenally in the past two years recording double-digit growth in Foreign Tourist Arrivals (FTAs), almost double that of global average growth. FTAs have crossed the 10 million mark, thanks to the annual growth of 15.6 per cent in 2017 on 2016 and 10.2 per cent in 2016 on 2015.
India Tourism has added some more feathers to its cap in the last four years by moving from its position at 65 to 40 out of 136 countries compared to the benchmark of Travel & Tourism Competitiveness by World Economic Forum in its Travel & Tourism Competitiveness Index Report 2017. India has also substantially improved its rank from 40 to 25 in terms of International Tourist Arrivals as per UNWTO.
Setting an ambitious target of 20 million FTAs by 2020, almost double of India’s achievement in 2017, is a manifestation of optimism based on encouraging trends of growth in the tourism sector. India has valid reasons to be hopeful about achieving this new milestone.
The issue is how the Government, the tourism industry and other stakeholders can unite to meet this challenge. An analysis of major factors that have led to high growth in India’s inbound tourism over the past few years reveal that the recent government policies, initiatives and events have been instrumental in the swelling inflow of international tourists.
The ease of access through the new e-visa policy has been a game-changer, helping India register commendable growth in international tourist arrivals. The impact of the new e-visa regime is visible from the fact that today around 25 per cent of the total FTAs into India are availing e-tourist, e-business and e-medical visas. The ease of acquiring an e-visa has further helped in a rapid switchover from traditional visa to e-visa.
India, however, is yet to tap the full potential of drawing travellers from all 166 countries that have been opened under the liberal e-visa regime. Almost three-fourth of India’s inbound visitors are still reliant on traditional visa. There are still many major source countries namely USA, UK, Germany, Canada, Malaysia and Sri Lanka where promotion of e-visa shall yield high dividends. For the remaining countries too, a well-planned roadmap and a long-term marketing strategy by the Ministry of Tourism in consultation with the ministries of Home and External Affairs will help the country accelerate towards achieving the goal of 20 million FTAs.
Improved air connectivity, leading to consistent air traffic growth of more than 20 per cent during the last three years has been another factor that stimulated growth in tourist arrivals. India is now one of the five fastest growing aviation markets in the world, with international passenger traffic reaching 65 million and domestic passenger traffic registering 243 million in the financial year 2018.
India’s new civil aviation policy, incorporating partial abolition of the 5/20 rule, the regional connectivity scheme and huge investments being contemplated for the aviation sector augur well for the country. The augmentation of airlines’ seat capacity, expansion and creation of airport infrastructure, direct air connectivity with top source countries and creation of new connectivity with other potential countries should be the focus areas of the government.
India needs huge investment in building world class tourism infrastructure. A large gap still exists between air transport and tourism service infrastructure. The Ministry of Tourism has taken a number of initiatives to fill the gap during the last four years by sanctioning projects to the tune of Rs. 7500 crore under its flagship scheme Swadesh Darshan and PRASHAD and launching ‘Adopt a Heritage Monument’ and ‘Iconic Tourist Site’ schemes. However, the quantum of investment envisaged in the annual budgets of the Ministry of Tourism is insufficient.
Considering the challenge India Tourism seeks to meet by 2020, it is time the Central Government increased budgetary support manifold. India, despite its huge tourism potential, spends too little compared to the neighbouring countries. It is also high time that the Ministry of Tourism and the State Governments proactively partnered with private players in the hospitality, airlines and travel trade sectors, in all spheres of tourism development, like destination development and marketing, and promotional campaigns.
The awaited new National Tourism Policy should include this provision in an unequivocal manner. The policy should also lay substantial emphasis on bringing investments from foreign and domestic investors into tourism infrastructure and destination development.
India was very successful in creating a distinctive identity when it launched the Incredible India campaign in 2002. In the very first year, there was more than 20 per cent increase in tourist traffic. Incredible India 2.0, launched in mid 2016, has yielded similar results. The Incredible India campaign should now be part of a holistic approach to Indian tourism, meeting its promises of a safe, connected and unique experience. Incredible India 2.0 must engage foreign travellers, particularly the millennials, on Facebook, Twitter, LinkedIn, Instagram, Snapchat and other digital platforms. Future promotional campaigns will need to determine its message to the world, define its audience, messenger and channels of communication and forge partnerships.
India’s vast cultural and natural resources as well as its price competitiveness remain key drivers of the country’s overall competitiveness. India has everything, from over 7500 km of coastline and rain forests, deserts and snow-capped mountains to wildlife, tribal habitation and a multicultural, multilingual and multireligious population. The country’s natural and cultural resources are still underutilised with over 6 lakh villages, with their own cultures and heritage that could be leveraged to create unique experiences for travellers. India’s challenge is not to build sites but rather experiences around what it already has.
India’s price competitiveness will continue to be a strong USP. The Union and the State Governments should ensure that the travel, tourism and hospitality industry is not burdened with high taxation. The governments should go the extra mile to incentivise the industry with tax reliefs, tax holidays and reduce the cost of capital by giving infrastructure status to hotels.
The Goods and Services Tax rates applied on the Indian hospitality market is likely to be detrimental to inbound tourism as they are the highest, across a broad range of neighbouring markets and India’s competitors in the region including Thailand, Indonesia, China, Malaysia, Singapore and Australia.
Safety and security are prime concerns across the globe. The success of the travel and tourism industry depends entirely on the ability and willingness of people to travel. India’s ranking by The Travel & Tourism Competitiveness Index Report 2017 amongst 136 countries is very low. India must actively address the perception and reality of its safety context. Enhanced security protocols should be designed, implemented and highlighted.
To reach the 20 million target by 2020, India would need to have a compounded growth rate of 28 per cent in FTAs in 2018 and the next two years. The past trend of growth in FTAs, however, reveal that since 2001, the annual growth rate has ranged from -6 per cent to 26.8 per cent. There was only one calendar year – 2004, in 15 years, when growth rate crossed 20 per cent. India’s performance in terms of growth rates in Foreign Exchange Earnings (FEE) during the same period has been relatively encouraging. The country registered more than 20 per cent growth in FEE (in USD millions) six times during the last 15 years with the year 2003 recording a mammoth 43.8 per cent growth and the year 2017 registering an impressive 20.8 per cent.
India therefore, has reason to believe that it may not be difficult to get closer to the target of doubling FEE by 2020. For assessing the impact of inbound tourism in a country’s economy, the growth rate in FEE is a more relevant and tangible indicator than the number of FTAs.
Tourism is a competitive sector. India’s efforts should be aimed at improvising and showcasing its competitive strengths to the world in order to compete globally. The Government’s ‘Incredible’ plans to take India’s tourism to higher orbits require wholehearted support from the tourism industry and the people of ‘Incredible India’.