Indian tourism industry plays a vital role to India`s economic growth

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 industry of 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 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.

Several measures have been adopted in infrastructure, which will polish Indian hospitality for the foreign visitors.

The Government of India has permitted a 100% FDI in the sector. It has also necessitated certain requirements for its approval:
• Up to four percent cost of capital of any new project will be required to pay for consultancy and technical services, including the fees for supervision, design, architects etc.

• Up to four percent net turnover will be paid for marketing/ publicity fee and franchising, while up to ten percent of total profits is to be paid for management fee plus incentive cost.
RNCOS’ latest market research report, “Indian Tourism Industry Outlook (2006)” presents a discussion of the government’s play in the development of Indian tourism industry and the key factors that are driving the sector.

Acoording to RNCOS`s research, the Indian Tourism industry brings large foreign exchange revenue contributing substantially to its GDP. In Q1, 2006 foreign tourist arrival in the country was a good 11%. Indian Tourism industry is one of the most important export industries of the country. Although the international tourist inflow is relatively low, India has found tourism emerging as an important sector of its economy.

Tourism yields substantial foreign exchange for India. It is turning into a volume game where a large number of participants are contributing to the revenue of the industry. Segments such as hotels, tour operators, airlines, shipping etc., are significant contributors to this revenue.

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 performance of the tourism industry has been very encouraging which has registered an 11% increase in foreign tourist arrivals.

RNCOS’ market research report, draws a colorful picture about the future of Indian tourism as its share of employment is expected to account 10%, including self-employment.

The report gives the following tourists count distribution for 2005 and 2006.

• While in 2005 in-bound tourist count was 4.2Mn, in 2006 it is expected to cross 5.5Mn.

• As compared to 2005, the out-bound tourists will make a jump of 22%.

• Interestingly, out of the total domestic tourists in 2005, nearly half were urban inhabitants.
According to the market researchers, in 2006, the total in-bound tourists were 1.28Mn while the same was 1.14Mn in 2005. The resulting foreign exchange earnings were as high as 12% of an amount of $1,780Mn.

Besides giving statistical details the report, “Indian Tourism Industry Outlook ( 2006 )” discusses about the significant role that the government has for the growth of the Indian Tourism industry. It also tells what key factors play in pushing this industry.

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