Indian tourism industry needs urgent image upgrade

New Delhi : The Indian tourism sector needs an urgent image makeover and higher investment in infrastructure, including through Public-Private Partnership (PPP) mode to capitalise on opportunities provided by overall growth in world tourist arrivals, the Economic Survey 2012-2013 said. Global tourist arrivals are expected to increase by 43 million every year on an average from 2010 to 2030.

The Survey tabled in Parliament also said that there is also a need to address issues like high Luxury Taxes on hotels by states and ensure greater cleanliness and safety for tourists, which can help in giving a big boost to this sector. “With world tourist arrivals expected to increase by 43 million every year on an average from 2010 to 2030 and Foreign Tourist Arrivals in emerging countries expected to grow faster than in advanced economies, a goldmine of opportunity in tourism is waiting for India, which at present has a paltry share of 0.64 per cent in world tourist arrivals,” the Survey said.

It, however, said “an image change for Indian tourism is needed with higher investment in tourism infrastructure including through PPP mode.” Calling for more private participation in the sector, it said, “Even user charges could be levied if monuments or tourist sites are developed by the private sector or through PPP .”

On the taxation issues, the Survey said refunding VAT as done in countries like Thailand and Singapore can also help the tourism sector. Domestic Tourism is also an important contributor to the growth of this sector with a 14.34 per cent compound annual growth rate of domestic tourist visits from 1991 to 2011. During 2011, there were 851 million domestic tourists, the Survey noted.

The hotels and restaurants sector with a 1.5 per cent share in India’s GDP in 2011-12 is an important sub-component of the tourism sector.

As per 12th Five Year Plan approach paper, India’s travel and tourism sector is estimated to create 78 jobs per million rupees of investment compared to 45 jobs per million rupees in the manufacturing sector, the Survey said. “As per Tourism Satellite Account (TSA) data 2009-10, the contribution of tourism to India’s GDP was 6.8 per cent (3.7 per cent direct and 3.1 per cent indirect) and its contribution to total employment generation was 10.2 percent (direct 4.4 per cent and indirect 5.8 per cent),” it added.

To promote tourism, the government has taken many policy initiatives including a five-year tax holiday for two-, three-, and four-star hotels located around all UNESCO World Heritage Sites (except Delhi and Mumbai) which start operating with effect from April 1, 2008 to March 31, 2013.Source: HBI