Vol.2 No.

3 July 2014 ISSN: 2320-4168

FUTURE POTENTIAL OF INDIAN TOURISM

Dr. C. Malleshwaran
Research Supervisor & Asst. Professor of International Business,
Department of Commerce (Center for Research), Chikkanna Government Arts College, Coimbatore
District

T. Kannan
Assistant Professor and Research Scholar, Department of Commerce, (Center for Research),
Government Arts College, Paramakudi, Ramanathapuram District

Introduction
Tourism is not only a growth engine but also an employment generator. According
to the economic survey 2011-12, the sector has the capacity to create large scale
employment both direct and indirect, for diverse sections in society, from the most
specialized to unskilled work force. It provides 6 to 7% of the world’s total jobs directly and
millions more indirectly through the multiplier effect as per the UN’s world tourism
organization (UNWTO).
The importance of tourism as a creator of job opportunities can be understood from
the fact that in India every one million invested in tourism creates 47.5 jobs directly and 85
to 90 jobs indirectly. In comparison, agriculture creates only 44.6 jobs and manufacturing a
mere 12.6 jobs. Moreover tourism is the third largest foreign exchange earner after gems
and jewellery and readymade garments.

Foreign Exchange Earnings from Tourism

Tourism is an important sector of Indian economy and contributes substantially in
the country’s Foreign Exchange Earnings. FEEs from tourism in rupee terms, during 2011
was Rs77, 591 crore, with a growth of 19.6% as compared to the FEEs of Rs. 64,889 crore
during 2010.
During 2012, the Foreign Exchange Earnings from tourism registered a growth of
21.8% from Rs. 77,591 to Rs. 94,487 crore when compared to FEEs during 2011. A statement
giving FTAs in India and FEEs from tourism for the years 2000 to 2012 is given below.

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Foreign Tourist Arrivals and Foreign Earnings During the years 2002 - 2012
Year Foreign Tourist % Change over Foreign Exchange % Change Over
Arrivals (in nos.) Previous Year Earnings in Crore Previous Year
2002 23,84,364 -6.0 15,064 -0.1
2003 27,26,214 14.3 20,729 37.6
2004 34,57,477 26.8 27,944 34.8
2005 39,18,610 13.3 33,123 18.5
2006 44,47,167 13.5 39,025 17.8
2007 50,81,504 14.3 44,360 13.7
2008 52,82,603 4.0 51,294 15.6
2009 51,67,699 -2.2 53,700* 4.7
2010 57,75,692 11.8 64,889# 20.8
2011 63,09,222 9.2 77,591# 19.6
2012 66,48,318 5.4 94,487# 21.8
#Advance Estimates *Revised Estimates
Source: Ministry of Tourism Annual Report 2012-13

Foreign Tourist Arrivals (FTAs)

During 2011 FTAs in India were 6.31 million with a growth of 9.2% over 2010. FTAs
during 2012 were 6.65 million with a growth of 5.4%, as compared to the FTAs of 6.31
million during 2011.
Foreign Tourist Arrival in the country have increased substantially during the past
decade motivated by both, business and leisure needs and are further expected to grow at
a compound annual growth rate(CAGR) of around 8% during 2010-2014. Visitor exports are a
key component of the direct contribution of the sector... By 2021, international tourist
arrivals are forecast to total 11,149,000, an increase of 6.1% pa generating expenditure of
INR 1,344.7 billion (US$ 30.3 billion). The country has received 3.3 million foreign tourists
during the period January to June 2013.
Drivers behind increase in International Tourist Traffic
• Value for money/ economical holiday destination
• Business cum pleasure destination
• Development of Kerala and Rajasthan as the most popular tourist destination in
India with their distinctive brand image
• Opening of the sectors of the economy to private sector/ foreign investment
• Reform in the aviation sector such as Open Skies Policy has led to better
connectivity with many countries with India
• Success of “Incredible India” campaign and other tourism promotion measures

Forms of Tourism in India

India offers various tourism options due to its vastness and diversity, attracting
tourist from all over the world. The country boasts of natural treasures like mountains,

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ocean, seas, deserts, rainforest, valleys etc. on one hand, while world-class healthcare
infrastructure on the other, which provides varied kinds of tourism options such as
adventure and rural tourism, sustainable tourism/eco-tourism, cruise tourism, golf tourism
and medical tourism.

Categories of Indian Tourism Industry

The tourism industry in India can be categorized under three major sub segments as shown
in the block diagram.

Touris Travel
Hotels and Industry
m
restaurants
Industr

Tour
Operators
Hotels and Restaurants
The Hotel and Restaurants Industry has contributed between 1.2% and 1.5% of the
GDP over the last seven to eight years. The Ministry of Tourism estimates that there are
more than 8700 hotels at 54 key locations across the country with a total room supply of
about 1, 74,000 including hotels in the classified, approved but not classified and licensed
by the state governments but not approved categories. Nearly eleven luxury hotels act as a
major player in this segment.

Tour Operators
The tour operators, tourist operators and adventure tour operators in the country
follow strict guidelines. As per the estimate of Ministry of Tourism, there are nearly 6000
travel trade companies and firms comprising of tour operators travel agents and tourist
transporters
Major Players
• Thomas Cook Pvt. Ltd.
• Cox & king Pvt. Ltd.
• Kuoni India Ltd.

Present Scenario of Tourism in India

The Indian Tourism sector is one of the largest service industries in the country in
terms of its contribution to the Gross Domestic Product (GDP) and Foreign Exchange
Earnings, as well as for providing employment to millions. The sector in fact is expected to
generate around US$42.8 billion (INR 1,897.7 billion) by 2017, according to an industry

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research. The amount of foreign direct investments (FDI) in flow into the hotel and tourism
sector during April 2002 to 2013 was worth US$6,664.20 million. Foreign tourist arrivals
during the month June 2013 stood
at 0.44million as compare to FDIs of 0.43million during June 2012, registering a growth of
2.5% and the domestic tourism is expected to increase by 15% to 20% over the next five
years.
Tourism in India is witnessing widespread growth on the back of increasing inbound
tourism by burgeoning Indian middle class, rising inflow of foreign tourist and successful
government campaigns for promoting “Incredible India”. Infrastructure development holds
the key to India growth in the tourism sector. Further the government has allowed 100%
foreign investment under the automatic route in the hotel and tourism related industry.
Significantly, the country has the potential to become a major global tourist destination,
with the tourism sector expected to contribute around INR 3,414.8 billion (US$ 77.0 billion)
by 2021. India is currently ranked in the 12th Asian Pacific region and 68th overall in the list
of the world’s attractive destinations.

Future Potential of Indian Tourism

The tourism sector is expected to perform very well in future and the industry
offers an increasing investment opportunity for long- term investors. The India travel and
tourism industry ranked 5th in the long-term (Ten year) growth and is expected to the
second largest in the employer in the world by 2019 this means that the sectors share of
total national investment will increase from 4.7% in 2011 to 4.8% in 2021.
Investment in Travel and Tourism

Y – axis constant 2011 INR (Billion) X-axis Year

The hospitality consultancy HVS India and World Travel and Tourism Council (WTTC)
has pointed out that in next 10 years, the Indian hospitality sector will need an additional
supply of 1,80,000 rooms, a capital investment of $25.5 billion for constructing them and
manpower of 2,11,000 to operate these additional hotels. From the current 810 million
travelers, both domestic and international, India is slated to host 1,747 million travelers in
2021. Some of the key policy changes mentioned in the white paper include grant of

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infrastructure status to the industry, hotel sector to be included within the interest
subvention schemes and rationalization of taxes which includes service tax, luxury tax,
VAT/sales tax, tax on transportation etc. also, the Public-Private Partnerships (PPP) for the
conservation of heritage sites, setting up single nodal agency for all hotel projects
approvals and higher budgetary allocation for tourism by state governments.
The tourism industry in India provides opportunities in diverse fields such as tours
and travel circuits, hospitality and hotel sector and development of specialized tourisms
such as medical tourism, rural tourism, cruise tourism, adventure tourism, eco tourisms,
agriculture tourism and wellness tourism.
The WTTC predicts that by 2021, global travel would reach 1,362 million travelers.
India, according to WTTC, is expected to account for 0.8% of those travelers or 11.1 million
international travelers. The tourism sector is witnessing past growth due to the ever-
growing number of participants in allied business such as hotels, tour operators, air lines,
shipping lines, among others. Therefore the sector is expected to witness high growth near
future and offer varied opportunities to the investor in all these areas of businesses. Infact
the hotel industry is one of the major areas wherein investors can look for long term
opportunities. Foreign tourist arrivals in the country have increased substantially during the
past decade motivated by both, business and leisure needs and are further expected to
grow at a compound annual growth rate (CAGR) of around 8% during 2010 to 2014.

Conclusion
To sum up, Indian tourism has vast potential for generating employment and
earning large sums of foreign exchange besides giving a flip to the country’s overall
economic and social development. Much has been achieved by way of increasing air seat
capacity, increasing train and railway connectivity to important tourist destinations, four-
lane roads connecting important tourist centers and increasing availability of
accommodation by adding heritage hotels to the hotel industry and encouraging paying
guest accommodation. But much more remains to be done. Since tourism is
multidimensional activity and basically a service industry, it would be necessary that all
wings of the central and state governments, private sectors and voluntary organizations
become active partners in the endeavour to attain sustainable growth in tourism if India is
to become a world player in the tourist industry.

References
• UNWTO Tourism Highlights, 2013 edition
• Annual Report 2011 to2013, Ministry of Tourism, Government of India
• A Brief Report on Tourism in India, August 2013, ASA & Associates, New Delhi
• African Journal of Hospitality, Tourism and Leisure Vol. 1(4) – (2011)
• Journal of Environmental Research and Development Vol. 5 No. 2, October-
December-2010

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