As the Union Budget 2024 approaches, the Indian tourism industry has high hopes for increased support and strategic initiatives
Tourism has always been a significant contributor to the economic growth and GDP of nations worldwide, and India is no exception. Indian tourism has consistently shown remarkable growth, even though it has not been a primary focus of government policies. There have been improvements in infrastructure and connectivity, but these efforts have been limited.
The Indian Tourism and Hospitality industry, faced unprecedented challenges during the COVID-19 pandemic. The sharp decline in both domestic and international travel led to a significant downturn.
Despite these challenges, the industry began to show signs of recovery in 2023. According to the Directorate General of Civil Aviation (DGCA), 2023 saw 152 million domestic flyers, an increase of almost 24% from 123 million in 2022, and nearly 6% more than the 144 million in 2019. International travel also showed signs of revival, with 63.9 million international travellers to and from India in 2023, close to the 64.2 million seen in 2019, and 35% more than the 47 million in 2022. Consulting firm McKinsey & Company projects that India will become the fourth-largest domestic travel market in terms of spending by 2030. Additionally, aviation analytics firm OAG indicates that India is now the third-largest domestic aviation market, after the U.S. and China.
The WTTC reported that this sector contributed INR 19.13 trillion ($230 billion) to the Indian GDP in 2023, marking a nearly 10% increase over 2019 levels. Employment in the industry also saw an 8% rise, reaching 43 million jobs. This highlights the sector's resilience and its vital role in the national economy. They projects that the Indian tourism industry will continue to grow, with contributions to the GDP expected to reach INR 21.15 trillion ($253 billion) in 2024. Jobs in the industry are also projected to increase by 2.45 million, accounting for one in every 11 jobs in India.
Despite positive indicators, the tourism industry has been largely overlooked in recent government budgets. This lack of support is concerning given the sector's significant contributions to the economy and employment.
Substantial investments and strategic initiatives are essential to fully capitalize on the industry's potential and ensure sustained growth. As the Union Budget 2024 approaches, the tourism industry remains hopeful for greater support and investment from the government.
Industry Perspectives
Jyoti Mayal, President, The Travel Agents Association of India (TAAI) feels that the allocation for overseas promotion and publicity has been drastically reduced to just Rs. 3 crore, down from Rs. 100 crore in the previous year. She says, "The industry eagerly anticipates increased budget allocations to enhance infrastructure, marketing, and skill development. Investments in connectivity, heritage sites, and eco-tourism can propel growth. A focus on sustainable practices, waste management, and conservation efforts aligns with responsible tourism. Simplifying visa requirements and encouraging visa-free entry for tourists visiting India can significantly enhance foreign tourist arrivals".
Pradeep Shetty, President, Hotel and Restaurant Association Western India (HRAWI) says that the tourism and hospitality, accounting for around 10 percent of India's GDP and should be declared a priority sector. "Granting infrastructure status to hotels and convention centers of project cost of Rs 10 crore and above is essential for attracting investments and accelerating growth in the hospitality sector. Abolition of the 18 percent GST category for hotels with room rates above Rs.7500/-, merging it with the 12 percent GST category, would boost both domestic and inbound tourism," he says.
Riaz Munshi, President, Outbound Tour Operators Association of India (OTOAI) says the outbound tourism sector is hoping for positive policy changes. "One key expectation is the reduction of GST rates on outbound tour packages, making international travel more affordable. Additionally, better Tax Collected at Source (TCS) policies are hoped for as compared to current TCS rates, which are causing financial and administrative problems," says he.
Mr Rajiv Mehra, President, Indian Association of Tour Operators (IATO) feels that the adequate funding is needed for promote tourism on global map. He says, "Ministry of Tourism should be given separate substantial funds for marketing and promotion for participation in overseas travel marts along with industry stakeholders, organizing road shows and for MDA Assistance to tour operators".
Mr. Ajay Prakash, President, Travel Agents Federation of India (TAFI) feels that for all the lip service to the economic and social benefits of tourism, the industry remains sadly neglected. Mere infrastructure development is not enough -the sector needs specific incentives if it is to realize its potential. The travel and tourism industry puts forth its Wishlist every year before the Budget and, come the day, is invariably disappointed. "The highest GST slab should not exceed 10% and travel agents/tour operators should be eligible to claim a setoff. Aviation fuel must be brought under GST to make airfares more affordable," says he.
(The writer is a travel influencer and writes on travel & tourism; views are personal)
