When an industry contributes 6.3% of the country’s GDP and provides support of 8.7% in the total employment in the country, you would expect it to be center-stage in the economic decision making of the country. More so, if the industry is usually associated with glamour. Yet tourism has historically suffered from myopia by the policy makers in India.

But slowly the tide seems be turning as the arrival of the new dispensation in May 2014 seems to be bringing about a change in these sad state of affairs.

Some of the key initiatives taken so far include:

• Extending the Tourist Visa on Arrival (TVoA) enabled by Electronic Travel Authorization (ETA) to 150 countries, for arrivals at 16 airports across India
• Focus on upgrading tourist facilities at 25 World Heritage sites in India
• Identification of 5 circuits under the ‘Swadesh Darshan’ scheme, under which ₹ 46.2 million was allocated in 2015-16 for specific themes-based circuits which included Krishna Circuit, Buddhist Circuit, Himalayan Circuit, North East Circuit and Coastal Circuit
• A 5 year tax holiday offered for 2-, 3- and 4- star category hotels located around UNESCO World Heritage sites (except Delhi and Mumbai)
• A new Visa category, M Visa or medical Visa, has been released, to encourage medical tourism in India
• 100% FDI permitted under the automatic route in tourism and hospitality
• Launch of ‘Project Mausam’ linking with China’s Silk Road Project, to revive the historical cultural & economic ties with 39 Indian Ocean littoral countries, and promote cross-cultural linkages
• Target for Airports Authority of India (AAI) to start operating 250 airports across the country by 2020

The markets have responded positively with Capital Investments in Travel & Tourism expected to be ₹ 2,264.1 bn in 2015-16, and rise by 6.3% per annum over the next 10 years to ₹ 4,356.7 bn by 2026. This is expected to generate additional direct & indirect employment for ~10 million by 2026.

Given the current comatose global economic environment, as upturn begins, these could well be conservative estimates. And as impressive as these numbers seem there are certain key actions the government can take to make Tourism as the fulcrum of a multi-sectoral approach to add a percentage or so to the India’s GDP growth rate.

These include:

• Financial-
  • Categorize 2-, 3- & 4- star hotels under the Priority Sector Lending norms of RBI, leading to huge boost in fund flows for this critical sector. This will also aid the revival of many stalled hospitality projects and enable reduction in NPA’s or alleviate the stressed assets portfolio in this sector.
  • Provide Infrastructure status to 2-, 3- & 4- status hotels, as it leads to reduced provisioning norms for Banks, higher loan tenors and lower interest rates applicable to such loans.
  • While Defence & Railways can showcase big ticket investments under ‘Make-In-India’ (MII), it is Tourism which has the best potential to leverage on it and deliver, with comparatively shorter project timespan and much higher benefits in terms of indirect employment creation & its large rub-off effect on the ‘Personal’ sector enunciated by the Prime Minister for the first time in India. MII must be interfaced closely with this sector, through appropriate policy framework, including through the relevant industry associations.
  • Empower the ‘Personal’ sector for tourism related projects, why way of focused Mudra Bank funding.
  • As tech aggregator companies & hyper local apps have shown, the broader Travel & Tourism space also provides the best opportunities for ‘Start-Up-India’ to flourish and help foster innovation, self-employment and Intellectual Property creation. Dedicate few of the announced 31 innovation centres, 35 Public Private Incubators and 500 tinkering labs for Tourism related project ideas.

• Manpower-
  • Collaborate with key industry academic institutions & bodies on the ‘Skill India’ initiative, dovetailing the government efforts for North East & J&K youth, to ease the shortage of skilled manpower for this highly manpower intensive & dependent sector.
  • Enable reciprocal recognition of industry academic degrees, diplomas and vocational courses with other countries for wider international recognition, making it easier for employment seekers to seek opportunities abroad, which eventually enhances India’s soft-power as well inward remittances.

• Policy & Infrastructural-
  • Having earmarked major inland waterways as National Waterways, permit & promote Cruise operations on them. This will provide a major boost to domestic as well as inbound tourism.
  • Clarify the green environmental regulations & CRZ norms to regulate yet not hinder riverside camping activities & projects.
  • Incorporate incentives for Regional & Feeder Airlines to operate from many non-operational and smaller airports, into the New Aviation Policy under consideration, to lower travel costs, which remain a major expense component deterring foreigner tourists considering exploring India.
  • Leverage the ‘Swachh Bharat’ initiative to provide proper hygiene and cleanliness at all public places, places of tourist interest, religious & pilgrimage sites, and Public Utility offices, to ensure positive memories for the travelers.
  • Encourage State Tourism bodies to spruce-up their State Tourism properties to provide cost-effective options to travelers from the bottom of the pyramid, the masses. It would also be fruitful to draft Model Public Private Agreement templates in this field, which States can lend from, in cases where the State does not have the financial wherewithal to manage it on its own.

Data Sources:

• World Travel & Tourism Council Economic Impact 2016 India
• India Brand Equity Foundation Tourism And Hospitality Sectoral Presentation January 2016