Role of Tourism Industry in Indian Economy

Role of Tourism Industry in India GDP has been quite alarming since the past few decades. Tourism industry has contributed enormously in the flourishing graph of India’s economy by attracting a huge number of both foreign and domestic tourists traveling for professional as well as holiday purpose.

The tourism industry in India witnessed a stupendous growth in 2006. The growth in the inflows in India’s tourism industry is calculated both in terms of business and vacations.

India is home to some of the world’s oldest civilizations. As of 2011, the nation has 1.89 billion residents who speak more than 15 official languages, follow a variety of religious traditions and live in a multitude of urban and rural centers. From the humid, tropical south to the rolling plains of the Ganges to the foothills of the Himalayas, the huge country’s geography is as varied as its population. As a result, millions of international and domestic tourists explore India annually, strongly influencing the national economy.

The number of foreign tourists arriving from all over the world rose from 0.37 percent to 0.53 percent as has been stated by UN World Tourism Organization (UNWTO) in the year 2006. This remarkable growth in the graph of tourism industry in India popularized the entire South Asia as one of the most spectacular tourist terminal. Indian tourism industry contributes to around 5.9 percent of the country’s GDP and it provides employment to around 41.8 million of inhabitants.

Some of the most significant features of India’s tourism industry or the Role of Tourism Industry in India GDP have been listed below:

  • The percentage of foreign tourists in India has increased by 12.4 percent in one year, that is, from 2006 to 2007. In 2006, Indian tourist industry witnessed a growth of 14.3 percent, which reached around 3.89 million in 2007
  • The foreign tourists arrival led to a robust growth in the foreign exchange earnings that increased from USD 5.03 billion during January-October 2006 to USD 6.32 billion during January-October 2007, which is apparently a 25.6 percent rise.
  • Deeming the growing rate of the tourists arrival in the country, the Indian tourism industry designed a wide spectrum of holiday packages and cheaper airfares to attract more tourists.
  • Nonetheless, the outgoing graph of tourism industry in India is in no way lagging behind from the inbound one. People traveling from India to abroad or states within India have increased by 25 percent.
  • The United Nations World Tourism Organization (UNWTO) has estimated the outgoing tourists to reach around 50 million by the year 2020.
  • According to the European Travel Commission, the average expenditure per trip of Indian tourists traveling abroad has increased from USD 611 in 2000 to USD 822 in 2006
  • The booming success of Indian tourism industry has led to a drastic change in the hospitality department as well. The increase in the ratio of tourists resulted in the increase of room rates and also setting up of a wide range of hotels and other residing areas.
  • A number of international hotels such as the Hilton, Accor, Marriott International, Berggruen Hotels, Cabana Hotels, Premier Travel Inn (PTI) and Inter Continental Hotels groups have professed about making some large-scale investments to append 65,000 additional rooms to suffice the needs
  • India is most likely to set up forty hotels of global brands by 2011. The hospitality segment in India is assumed to reach USD 11.41 billion in the coming two years

Following are the few benefits ensured by the tourism industry in India GDP in order to boost up the GDP of India:

  • The Indian tourism industry offers online booking system, one of the basic proofs of technological advancement in this sector. These online bookings are applicable for booking the air tickets via Internet by logging on to the website and also booking the hotel room of the place to be visited
  • The online tourism industry has accounted for a turn over of USD 800 million which is apparently 14 percent of the entire travel and tourism industry
  • The Role of Tourism Industry in India GDP also features medical tourism that includes traditional therapies like yoga, meditation, ayurveda, allopathy and other conventional systems of medicines is currently estimated at USD 333 million and is most likely to reach USD 2.2 billion by the year 2012.

The travel and tourism industry is responsible for 6.1 percent of India’s Gross Domestic Product, as of 2011. The tourism industry directly and indirectly employs more than 26 million citizens, which represents 5.7 percent of the country’s total employment, according to the World Economic Forum. Additional jobs related to tourism total over 37 million , or 7.5 percent. In 2010, the tourism industry brought in more than $14 billion and experienced an annual growth rate of 24.6 percent. This revenue directly impacts the economy, especially in sectors such as hospitality, hotels, construction, handicrafts, horticulture and agriculture. The hotel industry alone employs 150,000 people.

Role of Tourism Industry in Indian Economy

Foreign Tourism

According to the Indian Ministry of Tourism, more than 5.5 million foreign tourists visited India in 2010, representing an annual growth rate of 8.1 percent. Of the 940 million international tourist arrivals worldwide, India accounted for .59 percent, placing the country in 40th place in the rank of foreign tourists worldwide. In terms of the amount of money spent by international visitors, India ranked 16th in the world. About 900,000 foreign tourists — 16 percent — came from the U.S., and 700,000 — 13.5 percent — came from the United Kingdom. The top three nationalities of other visitors were Bangladeshi, Canadian and German. American visitors spent the most money, about $103.5 billion or 11 percent, while Spanish tourists spent $52.5 billion and French visitors $46 billion.

Domestic Tourism

As India’s economy has improved with the advent of the information technology boom of the 21st century, so has its population’s ability to travel. Many Indians choose to explore the diversity of their own country. In 2010, more than 740 million domestic tourists visited sites within India, representing a growth rate of 10.7 percent, according to the Indian Ministry of Tourism.

Popular Destinations

The most popular destinations for international tourists in 2010 included Mahrashtra, Tamil Nadu and Delhi, while most domestic tourists visited the states of Andhra Pradesh, Uttar Pradesh and Tamil Nadu, according to the Indian Ministry of Tourism. To attract more tourists to these and other destinations, the Indian government initiated several plans, including attracting foreign investment in hotels, restaurants and beach resorts. The government has invested almost $40 million in 37 destinations ranked as desirable tourist areas. Other economic incentives include complete tax exemptions for tourist facilities and amusement parks in Uttarakhand, and lower luxury taxes in the state of Rajasthan.