Inbound Tourism is Lowest Hanging Fruit for the Indian Economy

Earn More Foreign Exchange, Create a Million New Jobs, Invent New Economic Streams.

Balancing receipts against revenues is basic stuff, as much to the economy as a whole, as it is for individual balance sheets, of people and corporates. Amidst the challenges that all economies face, India’s task is no different. Inbound tourism is the lowest hanging fruit, remains  unexploited, waiting to be tapped, like never before in the history of our country!

Why now, you might ask? What is so special about NOW?

1. We have got the tourism ‘plant’ right, for the first time since Independence. The base had to be domestic, the inbound was to the creamy layer.

For a country the size of India, the structure was always wrong, upside down, with foreign tourists being the base, for the first few decades. Historically, Indian travel was all about pilgrimages, on holidays we tended to stay with friends and family, preferring the inimitable holdall, to carry with us. The right comparison for Indian tourism is the US, given our size and diversity. In the US, all tourism moves on the strength of the domestic market, and yet, over the years, they have a strong inbound as well. In recent years, more pronounced since Covid, we have the burgeoning Indian travel class, across all segments of the price brackets. The base of Indian tourism is now firmly and truly the domestic market. Foreign inbound would be its creamy layer, we have to create experiences that bring value, and precious foreign exchange for the country.

2. We needed the required infrastructure to ensure the experience is just right.

It is much in place, now. We can successfully start road journeys. Our roads are getting better by the day. Across price points, there is abundance of supply in accommodation, in towns and cities and across experiential stays that bring the uniqueness of Bharat. “Loos’ may not be there every 5 km but they are decidedly there every 25 km. Drinking water is not any problem anymore, given the variety of both Indian and imported mineral water, snacks both Indian and western.

3. Special interest travel is the new mantra, India has it all, only if….

Tourists are not just sightseeing anymore, they are chasing unique experiences, as in the next wave in international travel. India offers untapped potential in this sphere, already become popular with our domestic class. Special interest travel includes conferences, for which new facilities include the revamped Pragati Maidan, the Dwarka convention centre. In the private sector, new facilities like the JIO World Centre in Mumbai have already achieved a new global standard. For the first time ever, we can hold conventions for over 10,000 delegates.

4. New gateways and airline capacity to bring in foreign tourists.

With more than a 1000 aircraft on order, with new wide-body capacity on the anvil, Indian carriers will achieve never before access to global markets. We need new gateways, not just the few at present. Opening them to international travel will mean more dispersal of incoming traffic, bringing the fruits of globalisation across the hinterland.

5. Why NOW, is the question?

Tourists are not waiting to come, nor are airlines just waiting. These require time. There is a lead time of six months to a year. In the airline business, there is first the evaluation of a route, its viability, what type of aircraft to use, its availability, its potential revenue generation per aircraft seat in the overall dynamics of the airline operation. Much of this takes time. So, with tourists. In today’s competitive global tourism play, destinations compete extensively and intensively.

6. State governments are well poised to play their part once the centre says so.

Tourism is essentially a state subject in India. Central policies can provide guidelines and some financial support. But the thrust and implementation comes from the states. By and large, this has become an energised sector, with private sector coming forward with investments in hotels, resorts, QSR and other requirements. Ground transport is possibly still a challenge, especially for larger conferences, but this can be sorted out.

7. We should start now. Sound out the bugle.

It takes times to get the act together. First the intention to make serious intervention needs to be made, loud and clear. The basic white paper, the cities earmarked, with what proposed airline capacity, frequency, and given time, the entire value chain can be alerted and put into pure play.

8. A million new jobs can be created. New economies will be generated.

Since we are prone to comparing ourselves with our northern neighbour, it would be interesting to note how Tourism Could Help Boost China’s Growth, and what is China doing in this regard. According to a Morgan Stanley recent report “China’s Travel Transition,” dated May 8, 2024, we quote:

China’s tourism is poised to rival that of other popular global destinations. “While the recovery in China’s outbound travel remains stagnant and domestic consumption remains soft, visitor arrivals are picking up, rising more than 300% year-on-year in the first quarter,” says Qianlei Fan, Morgan Stanley’s transportation and infrastructure analyst for Hong Kong and China. “We see tourism revenue rising even higher and it could top $500 billion in 2033, translating to cumulative revenue of $2.8 trillion over 10 years from $131 billion in 2019.”

China’s above-average GDP growth over the past 20 years has been helped by the increase in its share of global exports of goods, but it has lagged behind in global service exports, which include travel and tourism as well as IT services, intellectual property charges and financial services. Since 2000, China’s global goods exports rose to 14% from 4%, while services exports only reached 6% from 1.8% over the same period.

“We think international travellers could be a key part of this story and see revenue from this group rising from $77 billion in 2019 to reach $431 billion in 2033.”

Analysts expect China to expand its share of global tourists to 6% by 2033 from 2.4% in 2019, with inbound tourism contributing as much as 4% to GDP over the next decade from just under 1%.  France, the world’s most visited tourist destination, by comparison reported about $71 billion from international tourism in 2019 with tourism overall contributing near 8% to GDP.

China has taken steps that should help revitalize the tourism sector, including infrastructure improvements like airport upgrades, high-speed rail services expansion, pollution control and public safety measures. Additionally, post-COVID policy changes such as visa-free entry for citizens of several European countries and Malaysia, as well as technology enhancements allowing foreign travellers to make digital payments and buy railway tickets more easily, should help boost growth.

Inflow of foreign tourists could add up to 35 million jobs in the sector over the next decade, equal to 5% of current total employment, which could help feed the productivity and consumption engines the government is trying to revive and be an additional contributor to GDP expansion,” says Fan.