India’s Tourism & Hospitality: Potpourri of Vibrant Culture & Traditions with rich Heritage

Spreading Happiness Globally with the Essence of India’s Oldest Multi-ethnic Society

Tourism and hospitality play a major role in a country’s economy in terms of monetary and infrastructural growth. Sunil Kumar Gupta, experienced professional in the fields of Financing, Taxation, Banking, Education, Investment Development, Oil & Gas Sector and project implementation, illustrates the various provisions, schemes and investments open in this sector.

The Tourism & Hospitality Sector (including Travel and Hospitality services such as hotels and restaurants) has been universally recognized as an agent of development and an engine for socio-economic growth. According to WTTC’s India Benchmarking Report 2015, every USD 1 million in Travel and Tourism spending in India generates USD 1.3 million in GDP.

During 2014-16, the Government has undertaken various initiatives through policy interventions and by enabling infrastructure development to make ‘Incredible India’ a ‘must revisit, must experience’destination. As a result of these initiatives, the sector has registered a phenomenal growth in domestic tourism, foreign tourist arrivals, foreign exchange earnings, and employment opportunities.

Fact & Figures

◦ USD 21.07 billion in Foreign Exchange Earnings (FEEs) through tourism during 2015 (4.1% Growth Rate over 2014)

◦ 1281.95 million domestic tourist visits during 2014.

◦ 32 World Heritage Sites.

◦ India was host to 8.03 million Foreign Tourist Arrivals (FTAs) during 2015

◦ 21 central institutes of hotel management.

◦ 78 jobs with every USD 1 million invested.

◦ 25 bio-geographical zones.

◦ GDP World Rank 12.

◦ In 2015, Foreign Exchange Earnings (FEE) from tourism were USD 21.071 billion as compared to USD 20.236 billion in 2014, registering a growth of 4.1%

◦ India registered 8.03 million FTAs in 2015, registering an annual growth of 4.5% over the previous year

◦ Tourism is a big employment generator – every USD 1 million invested in tourism creates 78 jobs.

◦ Tourism is the third largest foreign exchange earner after gems, jewellery and readymade garments.

◦ The number of domestic tourist visits in India during 2014 was

◦ 1281.95 million as compared to 1145.28 million in 2013, recording a growth rate of 11.93%.

◦ FTAs (Provisional) from January to May 2016 were 3.64 million, an increase of 9.1% over the same period of previous year

◦ FEEs (Provisional) from January to May 2016 were USD 9.58 billion, an increase of 14.4% over the same period of previous year

Sector Policy

National Tourism Policy, 2002

◦ Its vision is to enhance employment potential within the Tourism Sector as well as to foster economic integration through developing linkages with other sectors. Reasons to Invest

◦ Tourism in India accounts for 6.88% of the GDP and is the third largest foreign exchange earner for the country.

◦ India registered 7.7 million FTAs in 2014, registering an annual growth of 10.2% over the previous year.

◦ The FEEs from tourism during 2014 were USD 20.236 billion.

◦ India is 15th in the world in terms of International Tourism Receipts with a share of 1.58% of the World’s Tourism Receipts.

◦ India offers geographical diversity, attractive beaches, 32 World

◦ Heritage Sites and 25 bio-geographic zones.

◦ India has a diverse portfolio of niche tourism products – cruises, adventure, medical, wellness, sports, MICE, eco-tourism, film, rural and religious tourism.

◦ The centrally funded schemes of Swadesh Darshan and PRASAD provide for introducing suitable Public-Private Partnership (PPP) for improved sustainability of the projects.

Growth Drivers 

A growing recognition of tourism’s contribution to employment and economic growth, the availability of better infrastructure, focused marketing and promotion efforts, liberalization of air transport and the growth of online travel portals are seen as key drivers for tourism in the next decade.

There is a renewed focus on skill development in the Travel and Tourism Sector – 21 Government-run hotel management and catering technology institutes and 14 food craft institutes have been established to impart specialised training in hoteliering and catering.

◦ The availability of the Visa On Arrival facility significantly influences tourists’ travel plans to any country. During 2014, a total number of 39,046 Visas on Arrival were issued as compared to

◦ 20,294 Visas on Arrival during 2013, which amounts to a growth of 92.4%.

◦ The Tourist Visa on Arrival (TVoA) was renamed as Electronic Travel Authorization (ETA)

on 15th April 2015. Currently, the ETA facility is available for 113 countries.

◦ The launch of several branding and marketing initiatives by the Government of India such

as Incredible India! and Athiti Devo Bhava provides a focused impetus to growth.

◦ Recently, the Indian Government has also released a fresh category of Visa – the Medical Visa

or M Visa, to encourage medical tourism in India.

◦ The outlay for the Ministry of Tourism is INR 1483.20 crores.

Government Incentives

Key Provisions

◦ To develop and enhance tourist infrastructure, a provision of INR 600 crores is made for developing Swadesh Darshan (12 theme- based tourist circuits) and INR 100 crores for PRASAD for the beautification of pilgrimage centres.

◦ Services provided by Indian tour operators to foreign tourists in relation to tours wholly conducted outside India are being exempted from levy of service tax.

◦ Resources to be provided to start work along landscape restoration, signage and interpretation centres, parking, access for the differently abled, visitors’ amenities, including securities and toilets, illumination and plans for benefiting communities around them at various heritage sites which include churches and convents of Old Goa, Hampi, Karnataka, Elephanta Caves,  Mumbai, Kumbhalgarh and other hill forts of Rajasthan, Rani ki Vav, Patan, Gujarat, Leh Palace, Ladakh, J&K, Varanasi Temple town, UP, Jalianwala Bagh, Amritsar, Punjab and Qutub Shahi Tombs, Hyderabad and Telengana.

◦ The Visa On Arrival facility to be increased for travellers of 150 countries in stages, fromcurrent 43 countries.

Tax Incentives

An investment-linked deduction under Section 35 AD of the Income Tax Act is in place for establishing new hotels in the two-star category and above across India, thus permitting a 100% deduction in respect of the whole or any expenditure of a capital nature excluding land, goodwill and financial instruments incurred during the year.

State Incentives

◦ Incentives offered by State Governments include subsidised land cost, relaxation in stamp duty, exemption on sale/lease of land, power tariff incentives, concessional rate of interest on loans, investment subsidies/tax incentives, backward areas subsidies and special incentive packages for mega projects.

◦ Incentives are provided for setting up projects in special areas– the North-east, Jammu & Kashmir, Himachal Pradesh and Uttarakhand.

Incentives from the Ministry of Tourism

◦ Assistance in large revenue-generating projects.

◦ Support to Public-Private Partnerships in infrastructure development such as viability gap funding.

◦ Schemes for capacity-building of service providers.

FDI Policy:

 100% FDI is allowed under the automatic route in tourism and hospitality, subject to applicable regulations and laws.

 100% FDI allowed in tourism construction projects, including the development of hotels, resorts and recreational facilities.

Investment Opportunities

Tourism:

 The presence of world-class hospitals and skilled medical professionals make India a preferred destination for medical tourism

 As an opportunity for cruise owners and operators by capturing/capitalizing the opportunity from a vast beautiful coast line, vast forest and undisturbed idyllic islands.

 Rural tourism schemes have been implemented by the Ministry of Tourism in 2002-03 with the objective of highlighting rural life, art, culture and heritage in villages that have a core competence in art, craft, handloom, textiles and the natural environment. Under Swadesh Darshan Scheme, Ministry of Tourism identified Rural & Coastal Circuits as one of the thematic circuit for development.

 Eco-tourism is at a nascent stage, but there are conscious efforts to save the fragile Himalayan eco-system and the culture and heritage of indigenous people.Governing Authorities Ministry of Tourism, Government of India (www.tourism.gov.in)

 Hotel Association of India (www.hotelassociationofindia.com)

 Association of Tourism Trade Organizations, India (www.attoi.org)

 Federation of Hotel & Restaurants Associations of India (www.fhrai.com)

 Indian Association of Tour Operators (www.iato.in)

 Travel Agents Association of India (www.travelagentsofindia.com) India Tourist Transporters Association (www.ittaindia.com

 

As the tourism industry continues to grow, it’s scope and relevance too continues to increase. The investment policies and incentives are immense. Sunil Kumar Gupta has further elaborated on the same in his book “Windows to Success.” You can find out more by reading his engaging and informative blogs, or checking out his website www.sunilkumargupta.com.

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