Indian Tourism Industry Setting a Benchmark With Its Multiple Growths

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Nitin Konde, Apoorva Bajj

Mar 8, 2024 — 5 min read

Indian Tourism Industry Setting a Benchmark With Its Multiple Growths

The tourism business was one of the hardest damaged by the global spread of the COVID-19 pandemic. As governments tightened their grip and citizens stayed indoors, the tourism industry as a whole crashed. However, just as the old adage says, "There is always a bright light on the other side of the tunnel," so too did the industry begin to rise again after enduring such adversity as the globe emerged from the pandemic in question. The lockdown was one circumstance that worked to benefit of the tourism industry. After nearly two years of captivity, the unexpected release encouraged people to dust off their backpacks and set out to see the globe once more. According to a report jointly released by Booking.com and McKinsey & Company, particularly in the post-pandemic age, the tourism industry in India is seeing phenomenal growth, thanks in large part to the extraordinary expenditure habits of Indian tourists. By 2030, Indian tourists are expected to have spent $410 billion, making their country the fourth biggest spender in the world. India was the world's sixth-largest spender in 2019, with a total expenditure of $150 billion, a 173% rise over this year.

According to the data published in the report, Indian tourists were a big reason why the tourism industry bounced back in 2022 when it reached 78% of 2019 levels compared to 52% for Asia. Another interesting fact is that Indian tourists are expected to increase their travel numbers from 2.3 billion in 2019 to a whopping 5 billion in 2030.

The World Travel and Tourism Council ranks India at number ten out of 185 nations for the total contribution of travel and tourism to GDP in 2019. In 2022, the travel and tourism sector's impact on India's economy was valued at Rs. 15.9 trillion (US$ 191.25 billion), according to WTTC.

The World Travel and Tourism Council predicts that India's travel and tourism sector will contribute 7.8 percent to the country's GDP in the coming decade. There were 39 million jobs in India's tourist industry in 2020, or about 8% of the overall workforce.

The travel and tourism industry is projected to increase its contribution to the GDP from $178 billion in 2021 to $521 billion in 2028. It will likely be responsible for almost 53 million jobs by the year 2029. From 2019 to 2030, the industry's direct contribution to India's GDP is projected to expand at a pace of 7–9% per annum.

Going from an estimated $75 billion in FY20 to 125 billion by FY27, that's the size of the Indian tourism market. Due to improvements in airport infrastructure and increasing access to passports, the Indian airline travel market, which was valued at approximately $20 billion in FY20, is expected to quadruple in size by FY27. The rising demand from travelers and the ongoing efforts of travel agencies are driving the Indian hotel market, which was valued at approximately US$ 32 billion in FY20 and is projected to reach over US$ 52 billion by FY27. This includes both domestic and international hotels.

Total Contribution of Travel and Tourism to GDP at Real 2019 Prices

Investments and Developments
Government Backing the Industry

Investments and Developments

A hotel in Bandra, Mumbai, was signed by IHCL in December 2023, expanding its footprint in Maharashtra. An IHCL-SeleQtions hotel will be the brand name given to the Brownfield project. German '101 Best Executive Summit' honored TAJ as one of the "World's finest luxury grand palaces" in December 2023. Indian Hotels Company (IHCL) declared Ginger Mumbai Airport open for business in November 2023. Situated close to the domestic airport, the 371 Keys flagship Ginger Hotel will expose visitors to the brand's lean luxe design and service concept, which aims to provide a dynamic, modern, and hassle-free hospitality experience. In September 2023, Mahindra Holidays & Resorts (MHRIL) and the Government of Uttarakhand (UK) inked a memorandum of understanding (MOU) to construct four or five large-scale resorts in Uttarakhand with an investment of one thousand crores (US$120.16 million).

The Ministry of Tourism has been granted an investment of 2,400 crore (US$ 289.89 million) since the tourism industry offers young people a lot of chances to start their businesses and find employment. For new hotels in India that are 2 stars or higher, there is an investment-linked deduction available under Section 35 AD of the Income Tax Act. This means that any capital expenditures, or the entire expenditure, can be fully deductible. To boost India's attractiveness as a tourist destination, the government lowered the Goods and Services Tax (GST) on hotel rooms priced between Rs. 1,001 (US$14.32) and Rs. 7,500 (US$107.31) per night to 12% and on rooms priced over Rs. 7,501 (US$107.32) to 18% in 2019.

Government Backing the Industry

The tourism industry has always been a vital industry to the government of India. The government through its various schemes and policies has always supported this sector and always handheld as and when required. The Ministry of Tourism has been granted US$ 290.4 million in the Union Budget 2023-24. The Swadesh Darshan Scheme received US$ 170.85 million from the Union Budget 2023-24 to build 50 tourist spots that offer a holistic experience for visitors by ensuring physical, digital, and virtual connectivity, the availability of tour guides, and visitor security.

The PRASHAD tourist circuit development project has received US$ 30.25 million from the government's budget for 2023–24. A total of US$ 91.6 million has been disbursed for 37 projects throughout 24 states since the program's inception in January 2015. These projects have an estimated budget of US$ 146.4 million. Recently, the government told Parliament that twenty-seven additional sites have been selected for development as part of the PRASHAD initiative, which is run by the Centre. In a written reply to a question in the Lok Sabha, Union Minister of Tourism G Kishan Reddy stated this. He also mentioned that 57 locations have been chosen for development as part of the Swadesh Darshan 2.0 program.

Through an initiative called SAATHI (System for Assessment, Awareness, and Training for Hospitality Industry), the Ministry of Tourism and the Quality Council of India (QCI) are collaborating to help the hospitality industry be ready to continue operations safely and reduce risks caused by the COVID-19 pandemic. A hotel or other unit can get self-certification after going through the SAATHI framework and promising to adhere to all regulations in the letter. Guests of self-certified hotels and other lodging units can ask questions and get answers in live webinars. An assessment report outlining potential areas for improvement is shared with the assessed unit after a site evaluation based on the SAATHI framework is conducted by QCI-approved organizations if the hotel or unit so wants.