Granting industry status to tourism sector will help harness India’s rich potential

Being geographically diverse, India offers a variety of cultures that come with its own experiences, making it among the top countries in terms of international tourism expenditure. As per IBEF’s report on ‘Growth of Tourism and Hospitality Industry’, travel and tourism are two of the largest industries in the country with a total contribution of about $178 billion to the GDP. The vast coastline is dotted with several attractive beaches. With this, the travel market in India is projected to reach $125 billion by FY2027, while the international tourist arrival is expected to reach 30.5 million by 2028.

There is no denying that India is a large market for travel and tourism, thanks to a diverse portfolio of niche tourism products - cruises, adventure, medical, wellness, sports, MICE, eco-tourism, film, rural and religious tourism. India has been recognized as a destination for spiritual tourism for domestic and international tourists. India ranked 34 in the Travel & Tourism Competitiveness Report 2019 published by the World Economic Forum (WEF).

The country’s travel and tourism sector has demonstrated remarkable resilience recently. Increasing demand for hospitality services, bustling airports and renowned travel destinations indicate that tourism is not merely a recreational activity but a crucial driver of global economic expansion. With ancillary sectors also poised for significant growth, career opportunities are set to expand manifold in the travel and tourism industry.

We need a cohesive approach that would encompass the public and private sector on one hand, and the government (state and central governments, and local authorities) on the other hand, in order to continue to develop world class tourism infrastructure.

Amit Jain, founder of Magicfares, says “Recognizing tourism as a sustainable engine for economic growth and development, it is imperative to accord industry status to the travel and tourism sector, which will help in the regularization of policies and processes and better access to finance.”

This move could envision a strategic redistribution of tourism across diverse geographies, fostering inclusivity and exploration beyond traditional hotspots. The government’s continued efforts to enhance infrastructure, including new airports and expanded transportation networks, alongside developing religious circuits and lesser-known attractions, are pivotal for national growth and future-proofing the tourism sector. Improved accessibility can significantly boost tourism, benefiting local economies.

Standardisation of tax collected at source (TCS) at five per cent on foreign travel packages; rationalized GST rates; modifying the LTA rules to include the amount spent on hotel stays; partial tax exemption incentives to corporates for organizing national and international meetings; incentives to hotels, resorts, and travel agencies to promote local destinations; ease of doing business to ensure that the travel and tourism sector continues to be the one of the foremost employers in the country have been the expectations of the stakeholders, especially considering that the sector contributes significantly to the influx of forex.

However, the industry faces some challenges, such as lack of proper infrastructure such as access roads, electricity, water supply, sewerage and telecommunication, access and connectivity to new destination and exploring niche segments. Other issues include lack of adequate marketing and promotion, Regulatory issues related to visa and internal permits, human resources, service levels, taxation and security.

Granting industry status to tourism in India would be a transformative step towards harnessing the full potential of the sector. By prioritising tourism and adopting strategic policies, the government can position India as a leading global destination, attracting tourists from around the world and reaping the economic benefits that come with a thriving tourism industry.