Role of tourism industry in generating foreign exchange
1. Role of Tourism Industry in Generating Foreign Exchange
2. Role of Tourism Industry in Generating Foreign Exchange
1.1 What is foreign exchange?
Where money from one country is exchanged for that of another. The
system by which one currency is exchanged for another; enables
international transactions to take place. The Indian foreign exchange
reserve position continues to be buoyant with reserves standing at
US$1,35,658 million in the week ending Feb 25,2005.
Foreign currency assets were US $ 129844 million, US $ 2,692 higher than
previous week's figure. Compared to their last year figure this variation is
of the amount US $ 22,699 million, RBI weekly statement reported.
Exchange reserves have continued to rise for over some months except for
week ended Feb 5, 2005, when it fell marginally to Us $ 1,28, 914 million
from previous week's US $ 1,29,720 million.
In tourism, when a foreign tourist spends even a rupee, that is considered
as a foreign exchange earning for the country.
1.2 History on Tourism.
The first nomad, who wandered with his movable dwelling in search of
food and shelter from one place to another, must have been struck by the
variations of ecology. This must have been a pleasant experience for him.
The shift from unintended pleasure out of travel to traveling exclusively for
pleasure constitutes the history of tourism, which is closely related to
man’s economic growth, cultural and political development. Once the man
had settled on the land or found a place under the sun, which he called
home, movement from that to any other place brought out the meaning of
travel into the open.
3. Role of Tourism Industry in Generating Foreign Exchange
1.3 On Tourism Industry
Tourism is the largest export industry in the world. International tourism is
the largest single item in the world’s foreign trade and for some countries
it is already the most important export industry and earner of foreign
exchange. The impact of tourism on national economies is becoming
increasingly important today because of the growing size of the tourist
market. It is recognized so by the World Bank and the World Tourism
Organisation. 27 September has been earmarked as World Tourism Day.
Tourism is the world’s largest export industry today. According to World
Tourism Organisation international tourist traffic in 1997 was 613 million
which generated receipts of about US$444.0 billion. It is estimated that
tourism accounts for about 8 percent of the total world exports and more
than 30 percent of international trade in services. It is also estimated that
travel and tourism provide employment to 212 million peoples directly or
indirectly accounting for about 10.7 percent global work force.
The travel and tourism sector creates more jobs per million rupees of
investment than any other sector of the economy and is capable of
providing employment to a wide spectrum of seekers from the unskilled to
the specialized, even in the remote parts of the country.
4. Role of Tourism Industry in Generating Foreign Exchange
5. Role of Tourism Industry in Generating Foreign Exchange
2. World Tourism
According to the preliminary result of World Tourism Organisation the
number of foreign tourist arrivals in 2005 has increased by 5.5%. This
growth in 2005 was preceded by the growth of around 10% in 2004. For the
first time in year 2005 the number of foreign tourist arrival has crossed 800
million mark (808 million) from 766 million in the year 2004. Though this
growth is not great compared to previous year, it is still above the “long
term annual growth rate of 4.5%”. The Asia Pacific region experienced
growth of around 7%S with India’s tourism growing at around 13%. This
growth in world tourism is expected to slow down on 2006, around one
percentage point, but still remaining above the industry average.
There has been a global tourism boom in recent times. International tourism
has been performing better than world trade. Tourism receipts have
registered a higher growth than that of world export in services and
merchandise exports. The world tourist traffic increased by 3 per cent
during 1997 and the regions which benefited the most were Africa with an
increase of 9.2 per cent and South Asia with a growth of about 4.9 per cent.
It is projected that the international tourist traffic will increase to about
1602 million by registering a growth of about 4.3 per cent during the period
upto 2020. The South Asia Region including India is expected to record a
higher growth of 6.1 per cent.
6. Role of Tourism Industry in Generating Foreign Exchange
Fig 2.1: International Tourists Arrival In Millions
7. Role of Tourism Industry in Generating Foreign Exchange
Fig 2.2:- Graph On International Tourists Arrivals
Fig 2.3 :- Graph On International Tourism Receipts
8. Role of Tourism Industry in Generating Foreign Exchange
Fig 2.4 :- International Tourism Receipts In Billions US $
9. Role of Tourism Industry in Generating Foreign Exchange
2.1 World Tourism Organisation’s Vision 2020:
The World Tourism Organisation, the apex body has tourism few years back
predicted that US$ 2000 billion will be generated by the industry within the
year 2020 (Bezbarua, 1999) . It has analysed the emerging trends and
factors, which will influence the future growth pattern of the industry.
Some of the important observations of WTO are summarized below.
By 2020, there will be 1.6 billion international tourist arrivals
and tourism receipts will rise to a staggering US$2000 billion,
There will be sustained average annual growth rate of 4.3%
(for arrivals) and 6.7% (for receipts) throughout the world till
In spite of this growth only 7% of the world’s population will
become potential tourists. Thus according to WTO the industry
would be still in infancy even in the year 2020.
The top 10 tourist receiving countries would undergo major
changes and China would be receiving maximum number of
tourists (estimated to be 137.1 million with a market share of
8.6%) by 2020. Traditional market leader, France would come
down to the third position. China will have an average growth
rate of 8.0%in tourist arrivals during the period 1995-2020.
There will be changes in the top tourist originating countries.
Japan, China, and Russian Federation will emerge as the new
major outbound tourist countries.
Though Europe will remain the largest tourist-receiving region,
its share will come down to 45% from the present 59%.
10. Role of Tourism Industry in Generating Foreign Exchange
South Asia will grow at a rate of 6.1% per annum during the
period but its share will grow only up to 1.2% from the present
Tourism Industry in India
11. Role of Tourism Industry in Generating Foreign Exchange
3. Tourism Industry in India
“The present day tourism, if we take in India with the billion people. With the vast
civilization heritage of the country, from the Himalayas to Kanyakumari, J&K,
Central India, North Eastern states, Bihar, Western States, the large coastal line,
Andaman Nicobar and Lakshadweep Islands have a lot to attract the tourist. It has
sea coast in three sides, it has islands. It has snow covered hill region, it has desert
and it has thick forest regions. All of them are of natural evolution. Many centuries
old monuments, temples, churches and mosques are spread thoughout the country.
You will find in many parts of the country all three situated adjacent to each other.
It is a treat to watch such type of unity. India has one if the Seven Wonders of the
World, Taj Mahal. Any tourist can see the continuity of the enriched civilization of
billion people of the largest democracy with multiple religions, multiple languages,
and multiple cultures.”
Extracts from the Address of
President of India at the
Inauguration of the 5th Global
Travel & Tourism Summit in
New Delhi on 8th April 2005.
India – the land to travel to, a haven of tourism delights, a civilization to
tour through. Tourists come to India for its wealth of sights, cultural
exuberance, diversity of terrain and in search of that special something, an
extra punch that only India promises and delivers. Teeming with over a
billion people who voice over a million concerns in fifteen hundred
different languages, India is where people live with variety, thrive on
diversity and are too familiar with largeness to let it boggle them. Mud huts
and mansions face off across city streets. Lurid luxury and limp living are
inhabitants of the same lane.
From the smoky mangroves of the Sunderbans to the steaming Thar Desert,
sizzling cities like Mumbai and Delhi to the scintillating villages of
Khajuraho and Hampi, from the heights of the Himalayas to the deep blue
12. Role of Tourism Industry in Generating Foreign Exchange
waters around the Andamans, India is a travel haven – a tour package that
frustrates and delights, as demanding as it is rewarding. It demands that the
traveller be prepared for its own strange forms of tourism offerings - the
crowds at Pushkar, for pushy mendicants at Haridwar, for high
commercialism at spiritual retreats. But equally, it means that he be
prepared for an overwhelming warmth in the people, ease of conversation,
and to be stunned into speechlessness by the beauty, sometimes the
manmade and often the natural.
India is a country known for its lavish treatment to all visitors, no matter
where they come from. Its visitor-friendly traditions, varied life styles and
cultural heritage and colourful fairs and festivals held abiding attractions
for the tourists. The other attractions include beautiful beaches, forests and
wild life and landscapes for eco-tourism, snow, river and mountain peaks
for adventure tourism, technological parks and science museums for science
tourism; centres of pilgrimage for spiritual tourism; heritage trains and
hotels for heritage tourism. Yoga, ayurveda and natural health resorts also
The Indian handicrafts particularly, jewellery, carpets, leather goods, ivory
and brass work are the main shopping items of foreign tourists. The
estimates available through surveys indicate that nearly forty per cent of
the tourist expenditure on shopping is spent on such items.
India has significant potential for becoming a major global tourist
destination. The country witnessed foreign tourist arrivals of 2.75 million
Travel and tourism is the second highest foreign exchange earner for
India, and the government has given organisations in this industry
export house status. The industry is waking up to the potential of
13. Role of Tourism Industry in Generating Foreign Exchange
domestic tourism as well, with an estimated 4.7 billion domestic trips
in 2001. Tourism spending within India in 2001 was US$ 22 billion.
There is considerable government presence in the travel and tourism
industry. Each state has a tourism corporation, which typically runs a
chain of hotels /motels and operates package tours, while the central
government runs the India Tourism Development Corporation.
Divestment of these state-run tourism corporations have either
already taken place or are in process.
Incoming foreign tourist arrivals have shown a 6% compounded
annual growth rate over the last 10 years. The government has
realised the potential and has advanced several incentives to promote
infrastructure growth in the tourism sector.
Current investments are likely to see hotel room capacity increase by
20% over the next three years, with several international hotel chains
entering the hotel industry. Similar growth is anticipated in air travel
Fig 3.1:- Foreign Tourists Arrival To India
14. Role of Tourism Industry in Generating Foreign Exchange
India’s tourism crossed 3 million mark (3.37 million) in number of arrivals
of foreign tourist in the year 2004, showing a remarkable growth of 24%
over the previous year. The number if foreign tourist arrivals in 2004, 3.37
million, in India formed 0.44% of total world’s foreign tourist arrivals. The
foreign exchange earnings have also grown by 38% to US$ 4810. This
growth when compared to world tourism increase of only 10% for the same
year is remarkable. This remarkable growth in foreign tourist arrival is also
visible in domestic tourism. The domestic tourist arrival in India crossed
300 million mark (309 million) in the year 2003 and reached 367.6 million
in year 2004. The total contribution of this sector, direct and indirect, to
Indian GDP is around 5.83%.
Fig 3.2:- Foreign Tourists Arrival During Jan-Jul 2003 to 2005
15. Role of Tourism Industry in Generating Foreign Exchange
This sector is directly and indirectly linked to many other sectors in the
economy. A growth in tourism industry affects industries like handicrafts,
handlooms, transportation (mainly aviation), real estate (or infrastructure)
and many more. One of the major sectors to which tourism is linked to is
Real Estate. Both these sectors act complementary sectors to each other.
More the number of tourist arrivals, more is the requirement if better
infrastructure, hotels, restaurants, houses etc. The point to be noted over
here is that this real sector is not a stand alone sector. It is further linked to
more than 200 different sectors like cement, steel, glass, electrical, water
supply, carpentry, transportation and many more.
Another major aspect of tourism industry is the employment opportunities
attached to it. Tourism industry is the largest employer on the world. In
India, the direct employment from tourism contributes to 4.59% of the total
16. Role of Tourism Industry in Generating Foreign Exchange
employment in the country. Adding the indirect employment to it, the
figure goes up to 8.27% i.e. the total employment generated by the industry
in India id around 40million. Also, 50% of this employment is indirect.
This means that the growth in this industry has a strong impact on the
employment in other industries also.
Fig.3.3 :-Foreign Exchange From Tourism (in Cr.)
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Fig 3.4 :- Foreign Exchange Earnings Through Tourism
18. Role of Tourism Industry in Generating Foreign Exchange
Fig 3.5 :- Graphical Representation of Foreign Exchange Earnings
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Global Status & Trends
4. Global Status & Trends
20. Role of Tourism Industry in Generating Foreign Exchange
Although global recession and the September 11, 2001, events are
estimated to have resulted in a temporary decline in travel and tourism
demand in 2001-02, international and domestic tourism is expected to boom
over the next two decades. The World Travel and Tourism Council (WTTC)
estimates a 4.5 percent per annum increase in the total amount of travel and
tourism economic activity between 2003 and 2012. This is largely
attributed to a rise in global wealth, liberalization of international airspace,
cheaper flights and the use of the Internet as a travel tool. The earnings
from tourism have made it one if the worlds largest industries and the
fastest growing sectors of global trade accounting for 10.7% of global gross
domestic product(GDP), 12.8% of global exports, 8.2% of global
employment (0r one in every 12.2 jobs). And 9.4 % of global capital
Tourism in the least developed countries is growing faster than the world
average, holding the promise of prosperity for many; International tourist
arrivals worldwide reached 698 million in 2000, generating $595 billion
revenues. International tourism flows are expected to reach 1.5 billion by
2020 and revenue estimated to cross $2000 billion. Today, only 3.5 percent
of the world population travels internationally but the number if Asian,
particularly Chinese. Tourist is predicted to grow enormously as the region
becomes more integrated with the global economy.
The scale of world domestic tourism, on the other hand, exceeds world
international tourism by a ratio of 10:1. In India, for every international
tourist, there are 80 domestic tourists. Domestic tourism can form the basis
of a viable and sustainable tourism industry in India.
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Global Market Trends
5. Global Market Trends
22. Role of Tourism Industry in Generating Foreign Exchange
Consumer trends in tourism are gradually changing and require an
appropriate response in terms of both policy formulation and investment.
Current market trends indicate that:
Long haul travel will grow faster than intra-regional travel. A
growth of 24 percent is expected by 2020.
People with less time for leisure are likely to take more frequent but
shorter trips nearer home, opening up opportunities for
‘neighbouring country’ tourism.
The experienced traveler wants authentic, off-the-beaten-track
vacations in remote and less well-known places as against luxurious
five-star vacations, leading to an interest in rural and ethnic
The increase in the number if people with lots of money but little
leisure time has resulted in a growing emphasis on rest and
relaxation, and ‘wellness’ and ‘health’ holidays.
The elderly population in key tourism-generating markets has shown
a preference for cultural tourism against sun-and-sand vacations.
There is notable and increasing interest in spiritualism.
The demand for eco-tourism and nature-based holidays is expected
to double and even triple on the next 20 years.
Sports and adventure holidays continue to be popular with the
The interest in cultural tourism, spiritualism, ‘wellness’ holidays, eco-
tourism and rural tourism would tend to favour India, provided the country
can avail of the opportunities offered to maximize its natural advantages in
23. Role of Tourism Industry in Generating Foreign Exchange
these areas. The development of new tourism products and destinations
during the Tenth Plan must be based on market research and demand,
keeping the source markets and the age group of the tourists on mind.
India’s Place in World Tourism.
24. Role of Tourism Industry in Generating Foreign Exchange
6. India’s Place in World Tourism.
In Asia, China has emerged as a leading tourist destination and is poised to
become the world’s top tourist destination by 2020.
The WTTC has identified India as one of the world’s foremost tourist
growth centres in coming decade. After Turkey, India is expected to
achieve the fastest growth of the total amount of economic activity likely
to be generated by travel and tourism, at 9.7 percent over the next 10 years.
Also, the largest employment creation in China is expected to take place in
India over the same period. The growth in ‘visitor exports’ or spending by
international tourists, is likely to be fastest in India at 14.3 percent per
annum over the next decade. On the whole, the WTTC forecast for India is
promising, subject to key policy issues that affect the growth of the sector
If India is to realize its enormous potential in tourism it must provide
exclusive world-class tourism products and destinations to compete
successfully for a larger share of the Asian tourism market. Today,
outbound tourism from India far exceeds visitor traffic to the country partly
because there is a lack of world-class destinations within the country and
partly because the domestic tourism policy has been largely directed
towards those in the lower end f the spending spectrum. The scope and
reach of domestic tourism will have to be broadened in the Tenth Plan
through the development of competitive destinations that match
international standards in terms of price and also satisfy the international
traveler. India’s international arrival figures have not been able to keep
pace with neighbouring countries and have been exceeded by Thailand,
25. Role of Tourism Industry in Generating Foreign Exchange
Malaysia, Indonesia, Dubai and the Maldives. Since 1995, India’s share of
the world market has remained virtually stagnant at 0.38 percent, while
domestic tourism has grown at a phenomenal rate and India now accounts
for 4.6 percent of domestic tourism worldwide. In terms of tourism
receipts, India has shown relatively buoyancy because handicrafts items
and particularly in diamonds. The Tenth Plan visualizes a mutually
supportive role of tourism and handicrafts by encouraging haats and
shilpgrams and recognizing shopping as an integral part of tourism
experience to promote the ‘Made in India’ brand.
Fig 6.1 :- Share Of Top Ten Countries In International Tourists Arrival
26. Role of Tourism Industry in Generating Foreign Exchange
Fig 6.2 :- Share Of Top Ten Countries In International Tourism Receipts
27. Role of Tourism Industry in Generating Foreign Exchange
India’s Tourist Profile
28. Role of Tourism Industry in Generating Foreign Exchange
7. India’s Tourist Profile
India receives the largest number of overseas tourists from the United
Kingdom, which is its largest source of market, followed by the United
States, Sri Lanka, France, Germany, Canada, Japan, Australia and
Singapore. Of the tourists coming to India. 27.5 percent are in the age
group of 35-44 years, 23.4 percent in the age group of 25-35 years and 20.8
percent in the age group of 45-54 years. Women constitute only 30.5
percent of India’s total international arrivals. Repeat visitors account for
44.9 percent of the overseas visitors. A substantial number of these may be
non-resident Indians, as hotel reservations do not correspond to the number
of international arrivals in the country. The average length if stay of
foreign tourists in the country in 1998 was 31.2 days. Domestic tourism, on
the other hand, is largely pilgrimage-oriented and requires improvement in
travel facilities and pilgrim destinations.
Fig 7.1:- Top Ten International Markets for India During 2004
30. Role of Tourism Industry in Generating Foreign Exchange
8. Domestic Tourism
The potential of domestic tourism has grown substantially during the last
few years. As per the figures reported by the State Governments, the
domestic tourist visits in the accommodation establishments during 1999
are roughly estimated to be 176 million. An important feature of the
domestic tourism sector is its contribution to national integration and
creation of a harmonious social and cultural environment.
The Committee notes that plan allocation for Domestic campaign during
1999-2000 and 2000-2001 were decreased from Rs.4.50 crores to Rs.3.50
crores and from Rs.3.00 crores to Rs.2.00 crores respectively at the RE
stage. Now during 2001-2002 (BE), Rs.3.00 crores have been allocated for
Domestic Campaign (including fairs and festivals and craft Melas).
31. Role of Tourism Industry in Generating Foreign Exchange
When asked for the reasons for reduction of funds for domestic tourism at
the RE stage, the Department of Tourism stated that the same was reduced
on account of the additional expenditure envisaged for the Pacific Asia
Travel Association (PATA) conference 2001. When asked why proper
attention has not been by paid to the domestic campaign, the Department of
Tourism have replied that the Department is paying due attention to the
Domestic Campaign within the available resources also through release of
advertisements in the local media, celebration of local festivals in different
states and special exhibitions, etc. The amount allocated during 2000-
2001 was allocated for launching of campaigns in Print Media on important
decisions and release of advertisements. The Department was to launch
promotional campaigns on important events such as Sindhu Darshan, World
Tourism Day, Baudh Mahotsav, etc. In addition to the above,
advertisements will also be released in local travel media and tourism
supplements of newspapers, journals. It has also been stated that
advertising within the country for attracting domestic tourists is mainly
done by the States.
The Committee feels that domestic tourism is the mainstay of Indian
Tourism. The Committee has been constrained to note that the Department
of Tourism has not been giving proper attention to the Domestic Campaign.
The reason stated by the Department of Tourism for reduction for
allocation at the RE stage during 2000-2001 is also not convincing. The
Committee recommends that greater attention be paid to the Domestic
Tourism because it creates more jobs than any other sector for every rupee
invested. It also creates the jobs at the local level, dispensing with the
need of migration to distant places for earning of livelihood. In fact,
tourism plays a major role in promoting large-scale employment
opportunities. Also, the vast number of domestic tourists visiting different
parts of the country every year return with a better understanding of the
people living in the different regions of the country and the geographical,
biological and cultural diversity of India.
32. Role of Tourism Industry in Generating Foreign Exchange
Multifarious fairs and festivals occur throughout the year and are an
amalgam of India’s rich cultural heritage. They have added a new
dimension to the Department of Tourism’s promotional efforts. Financial
assistance is given to various State Governments to promote specific fairs,
financial assistance is extended in the form of publicity support,
particularly for releasing advertisements, printing publicity material
relating to the fairs/festivals and also for creating semi/permanent assets.
A small proportion of the outlay is proposed for special campaigns. These
are launched from time to time based on actual needs and requirements of
the market and would mostly be in the nature of release of advertisements
in trade journals as well as in general newspapers and magazines.
The Committee enquired as to what was the criteria/policy regarding
distribution of amount earmarked for domestic publicity between English
and the regional/vernacular print media. The Committee was informed that
at the moment there is no policy in this regard.
The Committee is surprised to know that at present there is no laid down
policy with regard to the distribution of amount earmarked for domestic
publicity between English and the regional/vernacular print media. The
Committee feels that there must be some criteria regarding placement of
advertisement in the print media. The Committee observes that India is a
country of continental dimensions that includes diverse races, languages
and religions. The Committee recommends that allocation for funds for
domestic campaign should be adequately distributed between the
English/regional print media so that people belonging to the various
languages and the different sections/segments of the society become aware
of the campaign launched by the Department of Tourism.
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Fig 8.1 :- Domestic Tourist Visits
34. Role of Tourism Industry in Generating Foreign Exchange
Fig 8.2 :- Graphical Representation of Domestic Tourist Visits
35. Role of Tourism Industry in Generating Foreign Exchange
Fig 8.3 :- Share Of Top Ten States In Domestic Tourism During 2004
36. Role of Tourism Industry in Generating Foreign Exchange
Tourism In India (2004-2005)
9 Tourism In India (2004-2005)
37. Role of Tourism Industry in Generating Foreign Exchange
9.1 India Tourism in 2004
The year 2004 has been a highly successful year for India tourism. The
foreign tourist arrival crossed the 3 million figure with arrivals estimated
at 3.37 million. The foreign exchange earnings also recorded an
unprecedented growth of about 38% with receipts at US$ 4810 million. The
growth of about 24% in foreign tourist arrivals during 2004 was achieved
over and above a growth of about 14% witnessed in the year 2003. This was
achieved despite the fact that the world over, there was a decline of about
1.5% in tourist arrivals in 2003, and only a growth of 10.7% in 2004. This
has been possible mainly due to the attempts made by Government to:
improve tourist infrastructure at important destinations/ circuits;
focus attention on growth of hotel infrastructure, particularly budget
enhance the connectivity through augmentation of air seat capacity
and improving road infrastructure to major tourist attractions;
directly approach consumers through electronic & print media
through “Incredible India” campaign;
create world class collaterals;
launch centralized electronic media campaigns;
have greater focus in the emerging markets, particularly in the region
of China, North East Asia and South East Asia;
use internet and web connectivity;
launch road shows in big source markets of Europe.
38. Role of Tourism Industry in Generating Foreign Exchange
The Indiatourism also continued to receive international acclaim when it
won the ‘Gold Award’ of the PATA in the travel advertisement print
category and marketing award in 2004. The Ministry of Tourism also won
the 2005 PATA Grand Award in the Heritage category, for its ‘Ajanta
Ellora Conservation & Tourism Development Project’ and the PATA Gold
Award in the Print Media category for its ‘Incredible - Taj’.
Fig 9.1.1 :- Foreign Tourists Arrival To India During 2003-2005
9.2 India Tourism In 2005
Foreign Tourist Arrival & Share of India in World Arrivals
The year 2005 has been a highly successful year so far as tourism in India
39. Role of Tourism Industry in Generating Foreign Exchange
For the third successive year, India witnessed a positive growth in foreign
tourist arrivals, reaching a level of 3.92 million against 3.46 million during
last year. The growth rate of 13.2% during 2005 was achieved over and
above a growth of about 26.8% witnessed during the year 2004; and that the
expected growth the world over during 2005 is estimated to be about 5-6%
only. With this growth, the share of India in world tourism, which was
hovering between 0.38% to 0.39% for number of years, is expected to be
Fig 9.2.1 :- Foreign Exchange Earnings US $ During 2003-2005
Fig 9.2.2 :- Foreign Exchange Earnings In Crores During 2003-2005
40. Role of Tourism Industry in Generating Foreign Exchange
41. Role of Tourism Industry in Generating Foreign Exchange
Accommodation of quality is basic infrastructure for the development of
Tourism. The Ministry of Tourism approves hotels from the point of view
of their suitability for international tourists. Various incentives and
benefits are linked to such approvals. As on September, 1999 there were
1229 hotels with 68032 rooms and on the approved list of Ministry of
Tourism. Break up of these hotels category wise is as below:
Star Category No. of Hotels No. of Rooms
5-Star Deluxe 55 12948
Heritage Hotels 62 1916
42. Role of Tourism Industry in Generating Foreign Exchange
To be classified 197 8307
8.1 Efforts to Overcome Shortage of Accommodation
In order to meet the rising demand of accommodation due to increased
growth in tourist arrivals, Department of Tourism brought out guidelines
for classification of Apartment Hotels, Time Share resorts and Guest
Houses. The Department also sanctioned capital subsidy for 21 budget
category hotels and interest subsidy for 160 budget category hotels during
last two years. In all 276 hotels in different categories were classified and
230 hotels were re-classified. Approval was granted for 109 hotel projects
with 7,206 rooms. In addition, 23 foreign technical collaboration in hotel
industry and 9 cases of foreign investments were cleared.
43. Role of Tourism Industry in Generating Foreign Exchange
11. Organisations Involved.
The organisations involved in the development of tourism in India are the
Ministry of Tourism and Culture with its 21 field offices within the country
and 18 abroad, Indian Institute of Tourism and Travel Management,
National Council for Hotel Management and Catering Technology, India
Tourism Development Corporation, Indian Institute of Skiing and
Mountaineering and the National Institute of Water Sports for HRD
development in the area of Tourism.
Central Government Organisations
• Department of Tourism
44. Role of Tourism Industry in Generating Foreign Exchange
• Indian Railway Catering and Tourism Corporation Limited
• Syama Prasad Mookerjee National Institute of Watersports
State Government Organisations
• Chandigarh Industrial and Tourism Development Corporation
• Delhi Tourism and Transportation Development Corporation
• Directorate of Information, Publicity and Tourism, Andaman
• Himachal Pradesh Tourism Development Corporation Limited
• Karnataka State Tourism Development Corporation (KSTDC)
• Kerala Tourism Development Corporation Limited (KTDC)
• Madhya Pradesh State Tourism Development Corporation
• Maharashtra Tourism Development Corporation (MTDC)
• Meghalaya Tourism Development Corporation Limited
• Patnitop Development Authority
• Punjab Tourism Development Corporation (PTDC)
• Rajasthan Tourism Development Corporation Limited (RTDC)
• Sun Temple, Konark
• Tamil Nadu Tourism Development Corporation (TTDC)
• Tourism and Civil Aviation Department, Himachal Pradesh
• Tourism Corporation of Gujarat Limited (TCGL)
• Tourism Department, Andhra Pradesh
45. Role of Tourism Industry in Generating Foreign Exchange
• Tourism Department, Arunachal Pradesh
• Tourism Department, Chhattisgarh
• Tourism Department, Goa
• Tourism Department, Goa
• Tourism Department, Gujarat
• Tourism Department, Haryana
• Tourism Department, Jammu and Kashmir
• Tourism Department, Kerala
• Tourism Department, Nagaland
• Tourism Department, Orissa
• Tourism Department, Pondicherry
• Tourism Department, Uttar Pradesh
• Tourism Department, West Bengal
• Institute of Hotel Management, Catering
Technology and Applied Nutrition, Bangalore
• Institute of Hotel Management, Catering
Technology and Applied Nutrition, Goa
• National Rail Museum (NRM)
• Palace on Wheels
In 1996 a public sector corporation was set up under the Ministry to
pioneer the development tourism infrastructure specially hotels in the
country. The present network of ITDC comprises 26 Ashok Group Hotels, 6
Joint Venture Hotels, 5 Restaurants, 11 Ashok Travel and Transport units,
29 Duty Free Shops at 6 Airports and a Down-Town Duty Free Shop in
46. Role of Tourism Industry in Generating Foreign Exchange
Delhi. The Government is actively considering disinvestment of ITDC to
ensure private participation.
A radical turnaround has been recorded in ITDC from a turnover of Rs.184
crore with a net loss of over Rs.37 crore in 2001-02, to a turnover of
Rs.379.78 crore with a net profit of Rs.39.03 crore in 2005-06. This
includes total turnaround in flagship Ashok Hotel from a turnover of Rs.35
crore (Net loss of Rs.15.09 crore) in 2001-02 to a turnover of Rs.93.03
crore (net profit of Rs.26.29 crore approx.) in 2005-06.
47. Role of Tourism Industry in Generating Foreign Exchange
Strategy in the IX Plan.
12. Strategy in the IX Plan.
The basic strategy during the 9th
Plan is to establish effective coordination
with all the relevant agencies to as to achieve synergy in the development
For the 9th
Plan period (1997-2002), the Planning Commission has approved
a Plan outlay of Rs. 793.75 crores for the Ministry of Tourism comprising
48. Role of Tourism Industry in Generating Foreign Exchange
Direct Budgetary Support of Rs. 485.75 crores and internal and external
resources of Rs. 308.00 crores.
Tourism development is a composite subject and does not necessarily mean
the development of only the tourism facilities like hotels, restaurants,
recreational activities etc. In fact, creation of tourism infrastructure will be
meaningful only if the areas has the minimum basic amenities and
infrastructure like roads, water, electricity, sewerage and
telecommunication facilities. This aspect has given importance in the
Tourism 'Synergy' programme. The State Governments have been asked to
prepare Master Plans for the development of tourism based on the same
49. Role of Tourism Industry in Generating Foreign Exchange
Tenth Plan Objective.
13. Tenth Plan Objective.
Tourism in India has tended to be regarded as an elitist conducted primarily
for the purposes of earning foreign exchange. Its vast potential as an engine
of growth and employment generator has remained largely untapped.
Although, with 25 million jobs, India ranks second in terms if number of
persons employed in travel and tourism, yet the contribution of the sector
as a percentage share if all employment is amongst the lowest in the world.
50. Role of Tourism Industry in Generating Foreign Exchange
The Tenth Plan objectives is to integrate with the socio-economic
objectives of the Plan by creating 3.6 million jobs a year through the
promotion of domestic and international tourism and to enhance India’s
share of international tourist arrivals from 0.38 percent to atleast 0.62
percent by 2007.
It will mobilize state governments to use tourism as a means for achieving
their socio-economic objectives; encourage the private sector to enhance
investment in tourism & provide legislative & regulatory support for
sustainable tourism & to protect the interests of the industry & the
consumer. The policy envisages involving the rural sector in the promotion
of rural, heritage, adventure & eco- tourism & will promote the
development of the competitive high quality products & destinations. Most
importantly it will remove the barriers to growth & resolve the
contradictions in policy to achieve inter-sectoral convergence of activities
that help the growth of tourism.
51. Role of Tourism Industry in Generating Foreign Exchange
Indian Tourism Policy Initiatives
14. Indian Tourism Policy Initiatives
The Government of India came out with its first ever policy on tourism in
1982. the policy was of a more a statement of intention than a plan for
development. It aimed at projecting India as the ultimate holiday
destination. The policy suggested granting export industry status to
tourism, developing tourist circuits, developing a marketing campaign
based in the country, and inviting private sector participation.
52. Role of Tourism Industry in Generating Foreign Exchange
Several legislative and executive measures followed the tourism policy. In
1987, the Tourism Development Finance Corporation was established with
a corpus fund of Rs.1bn and lit disbursed loans at concessional rates for
tourism-related projects. In 1988, the National Committee on Tourism set
up by the Planning Commission submitted a perspective plan on the tourism
industry. The committee recommended structural changes such as replacing
the Department of Tourism with the Tourism Board. It suggested the
creation of an exclusive cadre if the civil service-the Indian Tourism
Service. It also recommended the partial privatization of the national
carriers-Indian Airlines and Air India. The seventh five-year plan (1985-86
to 1989-90) also spoke of the basic framework of operational initiatives
vis-à-vis the tourism industry.
The next major policy initiative came in May 1992 in the form of the
“National Action Plan for Tourism”. The action plan contained several
objectives, to increase the employment opportunities in the tourism
industry; to develop domestic tourism for the budget travelers; to preserve
the national heritage and the environment; and to diversify the Indian
Tourism product. It aimed to increase India’s share of world tourism to 1%
in a span of five years. The plan recommended the development of special
tourism areas on the lines of export processing zones, improvement of
pilgrimage centers with financial assistance from the central government,
and the setting up of a National Culinary Institute. It also suggested the
creation of a flexible system for the recognition of travel agent and tour
The eight five-year plan (1992-93 to 1996-97) spoke about attracting high-
spending tourists from Europe ant the US. It also suggested the creation of
a “master plan” bky integrating area plans with tourism development. The
other thrust areas in the plan included moving away from culture-related
tourism to holiday and leisure, adventure, wildlife, etc.
53. Role of Tourism Industry in Generating Foreign Exchange
In May 2002, the National Tourism Policy was unveiled. This was
essentially a rehash of earlier policy and plans. The 2002 policy was,
however, ambitious in the sense that it recommended positioning India as a
global brand to attract tourists in larger numbers and exploiting the vast
potential of India as a tourist destination. In the same period in the form of
“opening of the skies” was introduced with the aim of international tourist
arrivals by enhancing air seat capacity and connectivity.
14.1 Policy Initiatives
The New Tourism Policy released in May 2002 has outlined the following
policy initiatives for the tourism sector:
The new policy is built around the 7-S Mantra of Swaagat
(welcome), Soochanaa (information), Suvidhaa (facilitation),
Surakshaa (security), Sahyog (cooperation), Sanrachnaa
(infrastructure) and Safaai (cleanliness).
The new policy envisages making tourism a catalyst in employment
generation, wealth creation, development of remote and rural areas,
environment preservation and social integration. The policy also aims
to spruce up economic growth and promote India’s strengths as a
tourism destination that is both safe and at the same time exciting.
The policy proposes the inclusion of tourism in the concurrent list of
the Constitution so as to enable both the central and state
governments to participate in the development of the sector.
No approval is required for foreign equity of up to 51 per cent in
tourism projects. Enhanced equity is considered on a case-to-case
basis. NRI investment is allowed up to 100%.
Approvals for Technology agreements in the hotel industry are
available on an automatic basis, subject to the fulfillment of certain
54. Role of Tourism Industry in Generating Foreign Exchange
Concession rates on customs duty of 25% for goods that are required
for initial setting up, or for substantial expansion of hotels.
50% of profits derived by hotels, travel agents and tour operators in
foreign exchange are exempt from income tax. The remaining profits
are also exempt if reinvested in a tourism related project.
Approved hotels are entitled to import essential goods relating to the
hotel and tourism industry up to the value of 25% of the foreign
exchange earned by them in the preceding licensing year. This limit
for approved travel agents/tour operators is 10%.
Hotels located in locations other than the four major metro cities are
entitled to 30% deduction from profit, for a ten-year period.
The expenditure tax has been waived in respect of hotels located in
the hills, rural areas, places of pilgrimage or specified place of
55. Role of Tourism Industry in Generating Foreign Exchange
Though the tourism industry is booming and helping both Indian and world
economies to grow, there are a few downsides to this industry. A huge
seasonal employment exists in this sector. This seasonal employment is
mainly in developing countries where tourism industry is not much
developed. In these countries for a few months the tourism is low and
comparatively fewer workforces are required. In India, the months of April,
May and June are low on foreign tourist arrivals. Apart from these
employment issues, another limitation to the industry is “leakage”. The
56. Role of Tourism Industry in Generating Foreign Exchange
term Leakage means that out of the total amount of money spent on the
tourism of a country, a major part leaks out of that country (mainly
developing) to the other countries (mainly developed). This leakage occurs
when the host country wants to provide international facilities to their
tourists. This leakage can be “internal leakage” or external leakage”. Many
times the tourists’ arriving the host country demand for the goods like some
equipment, food, drinks etc. which the host country cannot provide them.
This leads to internal leakage because to fulfil the needs of tourists, the
host country has to import these goods from other countries. External
leakage occurs because; these host countries (mainly developing) might not
have enough capital to build an infrastructure to attract foreign tourists,
which calls for an investment from foreign countries (mainly developed).
Now these external investors are a part of their business and will take a
major part of there earnings. In India the leakage is around 40%, i.e. 40%
of the earnings generated by India’s tourism leaks out of the country. This
leakage is significantly high and is a cause of worry. But, compared to
other developing nations, this figure is still better. The average leakage of
developing nations is around 80%, which is very high as compared to
leakage in India. The reasons for this are the improving infrastructure of
major tourist destinations, the escalation in international standard Indian
hotels like TAJ Group of Hotels, ITC Welcome Group, Oberoi Hotels etc.
57. Role of Tourism Industry in Generating Foreign Exchange
Barriers to Growth
16. Barriers to Growth
There are several factors that are responsible for adequate growth of the
tourism sector in India. These are :
Barriers related to approach
Barriers that discourage private investment
Factors that affect competitiveness.
Factors that affect the long-term sustainability.
58. Role of Tourism Industry in Generating Foreign Exchange
The effective & early removal of these barriers during the tenth plan is an
essential determinant for the success of new tourism policy.
16.1 Approach-Related Barriers
The need for a national consensus on the role & the level tourism
development in the country has been voiced repeatedly but a concerted
effort to achieve a consensus has not been made. Tourism should be limited
by state or regional boundaries if distortion in policies is to be avoided .It
us important that the consensus among all states is evolved through the
National Development Council (NDC) & the barriers to the growth of
Tourism has been denied the priority it deserves over successive plan
periods because its potential as a engine of economic growth has not been
appreciated. This is visible in the low allocation of resources. Allocation to
tourism has averaged 0.16% to the total plan outlay from the third plan to
the ninth plan. In the Tenth Plan , it is likely to receive an allocation of
0.72% .According to the WTTC , India is one of the lowest spendors of
out of 160 countries , while its neighboring competitors &
China invest far more : Malaysia (5.1% ) , Nepal(5%), Indonesia (8.4%),
Maldives (15.7%) , China (3.8%) . The growing domestic & international
demand, which is set to boom, reinforces the need for higher investment.
Failure to measure up to additional investment demand for domestic
tourism is likely to lead to the over exploitation of existing facilities,
discouraging foreign investors while leading to an increase in the outflow
of high spending domestic tourists from the country.
Most state government gives scant importance to tourism even though they
virtually control the tourism product located within their boundaries. They
are responsible, inter-alia, for local infrastructure, transport system,
sanitation & hygiene, leisure & recreation, law & order, the upkeep of local
59. Role of Tourism Industry in Generating Foreign Exchange
monuments & the general well being of the tourist. Their support &
participation is essential for tourism to succeed & spread its benefits
among the host population. Their lack of interest has resulted in an
unprofessional ad hoc approach that acts as a deterrent to the growth of
tourism. The approach of the state governments need to be focused, highly
professional & result- oriented if India is to avail of the opportunity that
the currently favorable market trends have to offer.
16.2 Barriers That Discourage Private Investment
Apart from the State Governments the private sectors plays a vital role in
the growth & development of tourism. Although the central government &
certain state governments have, from time to time, announced incentives to
involve the private sector in tourism development, the results achieved
have fallenn short of expectations. To provide a conducive environment
for private sector investment it is important to realize that the travel &
tourism sector is adversely affected by the lack of synergy in inter-sectoral
policies. The growth of the sector requires well integrated & coordinated
policies & stability & approach. Contradictions & arbitrary changes in
policy send confused signals to the investor. Unless infirmities in policy
are expeditiously removed well before the end of the Tenth Plan period the
new tourism policy is unlikely to succeed.
16.3 Factors that Affect Competitiveness
Being a long haul destination, India is more conveniently accessible by air
and cannot be easily reached by rail or road. A restrictive air transport
policy has a very deleterious effect on tourist traffic. There are insufficient
connections to most tourism destinations. The situation could be eased if
the large number of regional airports could open up as international
airports. The existing international and national airports also require
improvement. The price of aviation turbine fuel needs to be lowered to
60. Role of Tourism Industry in Generating Foreign Exchange
make air transport competitive and affordable. Today, it is cheaper to travel
by air to neighboring countries from India than to travel to certain parts of
India itself. A more liberal aviation bilateral regime and a new aviation
policy to benefit the economy of the country as a whole rather than the
national carriers alone would greatly aid the development of tourism.
Central and state governments need to evolve a taxation regime, which is
revenue generating without being burdensome. Accommodation and
transport taxes tend to be very heavy in certain states while the excise
policy in others is extremely harsh. The land policy in some states makes
the setting up of a hotel a formidable exercise and as many as 48 clearances
are required for the construction and running of a hotel. Such policies deter
private sector investment. The importance of protecting private investment
in tourism must also be appreciated and activities such as mining,
unauthorised construction, encroachments and haphazard development
around tourist resorts must be prevented through appropriate legislation
and public support.
As tourism is a highly competitive industry; the traveller has a wide range
of choices and looks for good value for money. The lack of quality
infrastructure, uncompetitive rates, indifferent or poor product quality,
difficulty in getting access to information on travel and tourist
destinations, untrained service providers, and above all, the lack of
hygiene, have an enormously negative effect on the competitiveness of the
tourism product. A world class destination requires professional planning
to prevent haphazard, uncontrolled growth, spatial and land use planning,
strict architectural controls, sewerage infrastructure and water treatment
plants. It requires improvement of entry points and appropriate facilitation
services. The lack of a visa-on- arrival regime on account of security
considerations places India at a disadvantage vis-à-vis its competitors. It is
necessary that India strikes a balance between security considerations and
the need for tourism development and reviews its visa policy to permit
61. Role of Tourism Industry in Generating Foreign Exchange
tourists from its major source markets to obtain visas on arrival. Equally
important is the behaviour of the host population. Training programmes are
required not only for hotel managers but also for tourist guides, taxi-
drivers, staff at eating places, porters etc., as the manner in which they
conduct themselves affects the tourist’s experience of the country.
Important do’s and dont’s in terms of a code of ethics need to be inculcated
among the service providers. During the Tenth Plan, the Department of
Tourism will organise capacity building programmes for service providers
through mobile training units.
16.4 Factors Affecting the Long-Term Interest of Tourism
A major impediment to the growth of tourism in India has been the lack of
awareness about the benefits that it can bestow upon the host population.
Unless the host population, both in the rural and urban areas, is supportive
of tourism, it cannot become a vibrant economic force. The rural sector, in
particular, has been largely ignored in tourism development and has
consequently been deprived of the benefits of employment and income
generation accruing from tourism. The Tenth Plan will seek to rectify this,
particularly in view of the world-wide interest in rural tourism. While an
awareness campaign that elicits local support for travel and tourism is
essential for the long-term growth of the sector, it is also important to
create awareness about the environmental impact of tourism by generating
respect for the carrying capacities of tourist destinations. This is
imperative as excessive exposure of ecologically fragile areas to human
interference can lead to irreparable environmental degradation. As the
demand for ecotourism is expected to grow enormously in the next decade,
it is important to have regulations in place to prevent such damage. The
local population must be convinced of the need to support such regulations
in the interest of long-term sustainability. India’s hill resorts have already
suffered seriously from a lack of concern for their carrying capacities and
the unchecked influx of tourists during the summer months. If India’s
62. Role of Tourism Industry in Generating Foreign Exchange
forest sanctuaries and pristine beaches are not to suffer the same fate,
attention will have to be paid during the Tenth Plan to obtaining regulatory
and public support for sustainability concerns.
63. Role of Tourism Industry in Generating Foreign Exchange
Role of Department of Tourism
17. Role of Department of Tourism
Being the nodal agency for the development of tourism in the country, the
department of tourism needs to make greater efforts to co-ordinate and
integrate the policies of central ministries that have an impact on the
development of tourism and to mobilise state governments and the private
sector to develop unique and competitive tourism products and
destinations. Crucial decisions affecting tourism are taken by other
ministries viz. the Ministries of Finance, Home, Civil Aviation, Surface
64. Role of Tourism Industry in Generating Foreign Exchange
Transport, Environment and Forests, Urban Development, Rural
Development, Ocean Develop-ment etc. The Department of Tourism has
tended to concentrate largely on its role as the promoter of international
tourism and generator of foreign exchange earnings while paying relatively
less attention to inter-sectoral policy co-ordination and the all-important
development of tourism infrastructure and product quality. In the Tenth
Plan, the Department will redefine and expand its role and work towards
intersectoral convergence and policy integration to remove the barriers to
the growth of tourism.
65. Role of Tourism Industry in Generating Foreign Exchange
Tenth Plan Strategy
18. Tenth Plan Strategy
The Tenth Plan strategy is to work towards a national consensus on the role
of tourism in national development and to focus on the removal of barriers
that hamper its growth. To make public sector investment more effective, it
is necessary to work towards the inter-sectoral convergence of policies and
programmes that could benefit tourism. The New Tourism Policy envisages
a framework, which is Government-led, private sector driven and oriented
towards community welfare, with the Government creating the legislative
framework and basic infrastructure for tourism development, the private
66. Role of Tourism Industry in Generating Foreign Exchange
sector providing the quality product and the community providing active
support. The overall vision of the development of tourism embodied in the
new policy will be achieved through five key strategic objectives. These
Positioning tourism as a national priority.
Enhancing India’s competitiveness as a tourist destination.
Improving and expanding product development.
Creation of world class infrastructure.
Effective marketing plans and programmes.
18.1 Positioning Tourism As A National Priority
A concerted effort will be made, through the NDC, to arrive at a consensus
on the role of tourism in the development agenda of the nation. Inclusion of
tourism in the Concurrent List of the Constitution will provide
constitutional recognition to the tourism sector and enable the central
government to legislate for tourism development. A proposal to this effect
has been circulated by the Department of Tourism to the state governments
for comments and has also been discussed at a Chief Ministers’ conference
and a majority of the states have agreed to the proposal. Other initiatives
include the setting up of Tourism Advisory Council with key stakeholders
functioning as a think tank and the constitution of a Group of Ministers on
Tourism to improve policy integration and co-ordination. The adoption of a
tourism satellite accounting system is underway to gauge more precisely
the contribution of tourism to the national economy. A national awareness
campaign in order to create a popular movement in favour of tourism is
being planned through a professionally managed communication strategy.
Most importantly, the efficiency of public investment in tourism supporting
67. Role of Tourism Industry in Generating Foreign Exchange
activities will be improved through effective inter-sectoral coordination
18.2 Enhancing India’s Competitiveness as a Tourist Destination
As air capacity available to India is woefully short during the peak travel
months, ranging from October to March, especially for the main tourism
originating regions such as North America, Western Europe and South
Asia, it is necessary to open India’s skies to increase capacity and help
enhance tourism. Additional seat capacity from the major tourism
generating destinations would significantly benefit the national economy
and provide a major impetus to tourism. Improvement in the standard of
facilities and services at the international and national airports will need to
be speeded up by employing professional manage-ment agencies and by
privatising and leasing out airports.
To enhance India’s competitiveness as a tourist destination, it is proposed
to simplify the visa procedures and consider strategies for the speedy issue
of visas including electronic visas and visas on arrival. An attempt will be
made, through a consensus, to reduce the heavy and multiple taxes that
reduce the competitiveness of the Indian tourism product. Special tourism
police will be deployed at major tourist destinations during the Tenth Plan
to provide security to travellers and promote India as a safe destination.
18.3 Improving And Expanding Product Development
Product development strategy during the Tenth Plan will be related to the
special interests oftourist target markets.
• Cultural and heritage tourism will be expanded. India has a vast array
of protected monuments with 22 world heritage sites, 16 of which are
68. Role of Tourism Industry in Generating Foreign Exchange
monuments. The integrated development of areas around these monuments
provides an opportunity for the development of cultural tourism in India.
• For the development of beach and coastal tourism, a number of sites on
the west coast of India will be identified for the development as beach
resorts by the private sector. The sites will be offered on long term lease at
preferential terms. These sites will primarily be on the beaches of Goa,
Kerala, and North Karnataka because of easier access by air. During the
Tenth Plan Kochi in Kerala and the Andaman and Nicobar Islands will be
developed as international cruise destinations because of their proximity to
internationalcruise routes and their exotic appeal.
• India’s unmatched variety of cuisine is becoming increasingly popular in
the world and will be developed as a special attraction. It is proposed to
create a highly skilled workforce of culinary professionals through an
innovative incentive scheme not only for India but also to promote Indian
• Village tourism will be promoted as the primary tourism product of India
to spread tourism and its socio-economic benefits to rural areas.
• India’s great wildlife variety has not been developed as a tourist
attraction. Wildlife sanctuaries and national parks will become an integral
part of the Indian tourism product. Priority will be given to the preparation
of site and visitor management plans for key parks. The quality of tourist
facilities available at the parks will be enhanced after a prioritisation of
parks. Tentatively these will be: Corbett National Park, Kanha National
Park, Bandhav Garh National Park, Kaziranga, Madhumali, Bharatpur,
Periyar, Ranthambore, Little Rann of Kutch, Chilka, and the Sunderbans.
• India has the greatest adventure tourism assets in the world in the
Himalayas and its rivers. Mountain-based adventure activities will be
developed and promoted. Regulations and certification for adventure
69. Role of Tourism Industry in Generating Foreign Exchange
tourism operators will be introduced so that the minimum standards of
safety and conservation are met.
• India receives only a minuscule proportion of the global meetings,
conventions and exhibition market. It is important that India develops a
world class international convention city not just for the sake of tourism
development but also for international and domestic trade and commerce..
• India’s most unique tourism product during the Tenth Plan will be
holistic healing and rejuvenation packages. In focussing on this, it will
capture the essence of Indian culture for international and Indian visitors
• India’s fairs and festivals, some of which are already well established
such as the Pushkar mela, the Desert Festival at Jaisalmer, the Kumbh Mela
etc. will be promoted as unique products of India. The Festivals of India
programme will be re-introduced in the top 12 future markets for India -
initially with an annual event in the United Kingdom and the United States,
to be followed by triennial events in the other markets.
• Shopping will be recognised as an integral part of tourism. The
development of dedicated shopping centres for traditional crafts designed
along the lines of village haats such as Dilli Haat and Shilpgram will be
encouraged and information on where to procure specific crafts made
available through shopping guides.
• Delhi will be positioned as the cultural capital of India supported by an
ongoing and vibrant calendar of cultural events. The development of such a
niche-based special interest product mix will position India as a unique and
18.4 Creation of World Class Infrastructure
70. Role of Tourism Industry in Generating Foreign Exchange
The need for physical infrastructure for tourism ranges from ports of entry
to modes of transport to destinations (airways, roadways, railways or
waterways), to urban infrastructure such as access roads, power, water
supply, sewerage and telecommunication. This underscores the need for
inter-sectoral convergence of infrastructural schemes and programmes that
could support tourist destinations.
The road network is vital for tourism as almost 70 per cent of passengers in
India travel by road. Many tourist circuits are entirely dependent on roads.
The current government plan for the road system in the country covering
both inter-state highways and improvements to rural roads directly supports
tourism development. There is urgent need to construct and improve
highways linking the 22 world heritage sites and places of tourist
significance. The Ministry of Road Transport and National Highways will
collaborate with the Ministry of Tourism in this effort.
The Indian railway system can also become an enormous asset to the
development of the tourism and hospitality industry in the country. The
railways hold a special fascination for foreign tourists who wish to travel
the country. For the vast majority of domestic tourists also, the railways is
the most affordable means of travel linking the length and breadth of the
country. Introduction of special tourist trains with pre-set itineraries and
private sector participation will be encouraged.
The Indian Railways plan to establish 100 hotels at railway stations to
serve specific tourist centres. The private sector will be given incentives to
operate these hotels on long-term leases. These hotels will provide clean
and inexpensive accommodation for budget tourists. The Indian Railways
also owns a number of heritage structures, which, if effectively maintained
and marketed, could serve, both as railway stations and places of tourist
interest. India has five hill railways, which compare with the best hill
railway systems in the world. The enormous tourist potential of these
71. Role of Tourism Industry in Generating Foreign Exchange
products will be tapped during the Tenth Plan. As steam-hauled trains like
the Royal Orient, Buddha Parikrama, Palace-On-Wheels and Fairy Queen
are extremely popular with tourists, steam traction for special tourist
segments will be continued. Trains like the Shatabdi and the Rajdhani with
a special tourism and hospitality focus will be planned both for foreign and
India’s 7,000-km coastline and her mighty rivers will be tapped for the
promotion of cruises. Care will be taken to develop world class tourism
products. As the Ministry of Tourism’s financial assistance to the states has
not been able to have the desired impact in terms of creating of world class
tourism infrastructure, the emphasis must shift to the development of
specific travel circuits as internationally competitive destinations and the
convergence of resources and expertise for these circuits.
The availability of trained manpower is essential to achieve excellence in
the tourism sector. At present, there are 21 Institutes of Hotel Management
and Catering Technology (IHM&TC) and 13 Food Craft Institutes in the
country. In addition, a good number of accredited institutes also cater to
the growing demand in the service sector. It is estimated that only 50 per
cent of the requirement of the market is met by these institutes. Five new
Institutes of hotel management would be set up in the Tenth Plan – three in
the newly created states of Uttaranchal, Jharkhand and Chhattisgarh and
two in the northeast. In addition, 15 more Food Craft Institutes will be set
up in the Tenth Plan, and efforts will be made to take culinary crafts and
training to the rural areas through mobile training units. A new scheme on
capacity building to train service providers in the unorganised sector such
as small hotels, dhabas, restaurants and other eating joints is also proposed.
18.5 Strategy For Effective Marketing
72. Role of Tourism Industry in Generating Foreign Exchange
As there is fierce competition for tourists from India’s source markets,
India needs to change its traditional marketing approach to one that is more
competitive and modern. It needs to develop a unique market position,
image and brand, which cannot be held by any other competitor. India’s
positioning statement will capture the essence of its tourism product to
convey an ‘image’ of the product to a potential customer. This image will
be related not only to its ancient Vedic civilisation with a cultural heritage
that continues to thrive especially in its rural areas but also to its
essentially secular nature.
In the Tenth Plan, an extensive market research programme will be
launched in the target source markets and tourism products developed to
cater to the interests of each source market. An effective and ongoing
market representation presence will be established with the travel trade in
each source market and an Internet portal set up in various languages to
provide information, a description of the product and the product
requirements of the target market segments. The Internet has a great impact
on the marketing of travel and tourism. It has already established itself as a
channel through which tourism organizations can promote their destinations
and products. Indian tourism will utilise both the Internet and other
emerging interactive technologies to avail of the benefits to be gained.
73. Role of Tourism Industry in Generating Foreign Exchange
The Path Ahead
19. The Path Ahead
The tourism sector needs a national consensus on the role and place of
tourism in national development and the early removal of impediments that
have hitherto handicapped its growth. The Tenth Plan target of the creation
of 18 million jobs through tourism requires a substantial investment of Rs.
74. Role of Tourism Industry in Generating Foreign Exchange
38,800 crore at the rate of 47 jobs per one million rupees of investment,
both from the public and the private sector. The central sector outlay for
tourism during the 10th Five Year Plan is Rs. 2,900 crores, the scheme wise
break-up of which is given in the Appendix.
Public sector investment, though limited, can be made more efficient
through the intersectoral convergence of policies and programmes
supportive of tourism. An integrated inter-sectoral investment plan that
provides effective infrastructural support to tourism through the Ministries
of Railways, Surface Transport, Shipping, Civil Aviation, Urban
Development, Rural Development and Environment and Forests etc. can be
achieved through the preparation of a tourism component plan. Private
sector investment can be enhanced by removing the barriers to growth and
expediting critical policies that are being evolved. Public and legislative
support will be essential for the sustainable development of the sector.
The success of the New Tourism Policy 2002 will be largely determined by
the success achieved on all these fronts.
75. Role of Tourism Industry in Generating Foreign Exchange
The ‘Incredible India’ Campaign
Marketing India to the World
19. The ‘Incredible India’ Campaign
Marketing India to the World
‘Before the Incredible India campaign, India was being promoted differently in
different countries, if at all. There weren’t two or three distinct images. This
campaign changed that.’
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- Lavanya Anirudh,
Account director, Ogilvy &
Mather (India), in 2004.
Before 2002, the Government of India (GoI) regularly formulated policies
and prepared pamphlets and brochures for the promotion of tourism;
however it did not support tourism in a concerted fashion. As a result, the
country attracted very few tourists, a country like France, six times smaller
than India, attracted around 20 times the number of tourists. India perhaps
was an indication of the extent to which previous governmental efforts to
promote tourism had been unsuccessful. However, in 2002, the tourism
ministry made a conscious effort to bring in more professionalism in its
attempts to promote tourism. It formulated an integrated communication
strategy with the aim of promoting India as a destination of choice for the
The tourism ministry engaged the services of Ogilvy & Mather (India)
(O&M) to create a new campaign to increase the tourist inflows into the
country. The “Incredible India” campaign was launched in 2002 with a
series of television advertisement. The campaign was based on the striking
pictures and themes related to India’s cultural legacy (yoga, ayurveda),
scenic locales, etc. The aim of the campaign was to project India as a
unique opportunity for physical invigoration, mental rejuvenation, cultural
enrichment and spiritual elevation.
The campaign was rolled out on some of the major television channels
between January and March 2002.
The Incredible India Campaign on TV
Channels Period Region
Discovery January 15-March Europe, Asia, Middle East &
77. Role of Tourism Industry in Generating Foreign Exchange
Channel 15,2002 (8 weeks) Africa
15,2002 (8 weeks)
South-East Asia, Australia and
BBC World January2002-
March2002 (10 weeks)
Europe, Asia-pacific, Australia
CNN January 2002-March
2002 (10 weeks)
Europe, Asia, Middle East,
The campaign also made exclusive use of the internet. In March 2002, the
official website of the tourism ministry (www.tourismofindia.com) was
redesigned to make it both more attractive and functional. Prospective
tourist could use the website to plan their trip to India. The print ad
campaign was complemented by a similar ad campaign on the internet,
which focused on specific destinations and themes. The online ad were
placed in country-specific travel websites, portals, and search engines.
Electronic newsletters and mailers were sent to people who subscribed to
78. Role of Tourism Industry in Generating Foreign Exchange
Region-wise Websites Visits
Region Total visits Percentage
Asia 188,116 49.96
North America 125,573 33.34
Oceania 37,760 10..3
Europe 22.853 6.07
South America 1,192 0.32
Africa 1,055 0.28
In March 2005, a TV campaign “Let us go to India” was launched in Japan
and a campaign “Walk with Buddha”, in Thailand and China. Several
roadshows were also organized as part of the Incredible India campaign in
Milan, Paris, and cities in Serbia and other East European countries. A tram
in Berlin, Germany, was painted with the “Incredible India” colours and, it
reportedly became the talk of the town.
In 2005, the tourism ministry launched several innovative schemes such as
‘Athithi devo Bhava, ‘rural tourism’, and ‘Priyadarshini’ under the
Incredible India umbrella. The Athithi devo Bhava program was a social
awareness initiative of the ministry to sensitize the general Indian public
to; the importance of treating foreign tourists with respect and courtesy. As
a part of the program, taxi drivers, guides, immigration officers, tourist
police, and other people in select cities like Delhi, Mumbai, Jaipur, Agra,
and Aurangabad, who interacted directly with tourists, were trained on
personal hygiene, etiquette, English language skills, etc.
79. Role of Tourism Industry in Generating Foreign Exchange
The “rural tourism” scheme had the twin objective of showcasing the
uniqueness of the arts, crafts, and heritage of rural India and helping the
rural folk benefit from tourism. In the first phase, 63 rural areas were
identified and Rs. 5 mn was allotted to each area for upgrading approach
roads, landscaping, cleaning water bodies, maintaining monuments, etc. the
ministry joined hands with Non-government Organisation (NGOs) to
provide a unique experience of rural India to discerning tourists. An
exclusive website-www.exploreruralindia.org, was also launched. Similarly
under the “Priyadarshini” scheme, the ministry made efforts to bring more
women into tourism-related areas. The ministry reportedly spend Rs.1. bn
on the Incredible India campaign in 2005.
More importantly, the campaign was successful in boosting international
tourist travels. “In 2004 Incredible India campaign led to a 36% growth in
the US dollar terms and 255 in number of tourists (both domestic and
foreign),” said Amitabh Kant, Joint Secretary, Ministry of Tourism. The
upward surge in tourist numbers continued in 2005 as well and it resulted
in brisk business for hotelier and other tourism-related enterprises.
Domestic tourism too received healthy growth levels.
The high standards of the campaign were acknowledged when the Indian
tourism ministry won the 2004 PATA Gold award for the “Incredible Taj”
Media report suggested that the ministry of tourism was planning to; spend
Rs.1.5 bn on the Incredible India campaign in 2006. while around Rs.1 bn
was to be spent on overseas promotion and marketing, the remaining was to
be allocated for advertising in the print and electronic media.
According to projections made by the World Travel and Tourism Council
(WTTC), India could expect to earn US$90.4 bn in revenues and crate 28
million jobs from tourism sector by 2014. There was also a general
80. Role of Tourism Industry in Generating Foreign Exchange
agreement that India could capitalize on its distinct strengths and
effectively market itself. However, irrespective of whether or not the
“Incredible India” campaign had proved successful in bringing in more
tourist and revenues.
Taglines of Tourism Departments of Some States
No State Tagline
1 Orissa Senic.Serene.Subline
2 Kerala Gods Own Country
3 Maharashtra Unlimited
4 Uttar Pradesh Amazing Heritage.Grand Experieces
5 Madhya Pradesh The very heart Of India
6 Andhra Pradesh The Kohinoor Of India
7 Goa Go Goa.The Perfect Holiday Destination
8 Gujarat Vibrant Gujarat.Where Life is a
9 Andaman Emerald.Blue.And You
81. Role of Tourism Industry in Generating Foreign Exchange
Fig 20.1 :- Print Ads Of Incredible Taj
Print Ads in “Incredible Taj” Campaign that Won the PATA
82. Role of Tourism Industry in Generating Foreign Exchange
83. Role of Tourism Industry in Generating Foreign Exchange
Indian Tourism Industry has a strong relationship with the economic growth
of the country. As GDP continues to increase, it enhances investment in
basic infrastructure like transport system, which is a vital support to
tourism in India.
Closely associated is the hotel industry in India, which has added to the
growth in Indian tourism since 2004. India has become one of the popular
tourist destinations in the world. Of course there has been the government’s
support through its “Incredible India” campaign, which showed new light to
foreign tourists. In 2005 the arrival of international tourists grew by 16%
giving boost to Indian tourism.
The Union Financial Budget 2006-07 has allocated Rs.8.5 Bn for Indian
tourism sector in the tenth Five Year Plan. Having increased the service tax
to 12% there is more expected revenue for the government.
With lot of imagination and ideas the Indian tourism sector is gathering
momentum and is set to have not only large numbers of foreign tourists but
also make a big share in the country’s Gross Domestic Product ( GDP ).
Recent statistics have revealed that during the first quarter of 2006, the
84. Role of Tourism Industry in Generating Foreign Exchange
performance of the tourism industry has been very encouraging which has
registered an 11% increase in foreign tourist arrivals.
With the given allocation to the Indian tourism industry in the budget, the
Government appears to have realized the significance of this sector in
earning valuable foreign exchange as also enabling greater employment. As
new destinations develop the tourist inflow is anticipated to increase.