India’s tourism sector accounts for 6.8% of the country’s GDP and is projected to grow 7% annually until 2025. Increased connectivity, improved infrastructure, and deregulatory government initiatives contribute to the growth of the sector. The industry is divided into two categories: inbound and outbound tourism.
Bringing India to the World
Expected to surpass $40 billion by 2020, the Indian outbound tourism category is growing due to evolving lifestyles, improving connectivity through infrastructural renovations, and increasing purchasing power of the middle class. Australia-based FCM Travel Solutions reported a 20-25% growth in Indian outbound travel from 2014 to 2015. Experts project that the number of Indian outbound travelers will reach 50 million and their spending will exceed $28 billion by 2020.
The U.S. is the third most popular Indian tourist destination and has been the top country for Indian tourist spending since 2010. In 2014, visitors spent $9.6 billion on U.S. travel and tourist goods and services. CEO of Brand USA Christopher Thompson estimates that Indian tourists spend $5,000 to $6,000 during each visit to the United States.
According to the U.S. Department of Commerce, 43% of Indian travelers to the U.S. came for business purposes in 2014; family visits and vacation/holiday were also top reasons. According to the Economic Times, the top ten U.S. travel destinations for Indians are New York, California, Hawaii, Florida, Washington, Texas, New Jersey, Alaska, Virginia, and Michigan. Popular activities and interests among Indian tourists are sightseeing, nightlife, theme parks, beaches, shopping, and outdoor experiences.
Prime Minister Narendra Modi’s visits to countries such as China and Australia have sparked Indian interest in visiting these nations. They have also prompted the opening of tourist offices in India by countries such as Spain, South Korea, and Indonesia.
Bringing the World to India
India is rising as a foreign tourist destination due to affordability, accommodations for both business and leisure, development of rural sites, and accessibility. In the first half of 2015, inbound travel increased 9.2% partly due to the Indian government’s introduction of electronic visas, which are easily accessed in 150 countries. According to India’s Ministry of Tourism, this resulted in a 15% increase in foreign exchange earnings from $1.2 billion in 2014 to $1.4 billion in 2015.
Popular attractions among visitors to India include the Amber Fort in Jaipur, the Taj Mahal in Agra, Humayun’s Tomb in New Delhi, and the Golden Temple in Amritsar. Other famous destinations include Kerala, Goa, and Kashmir.
Apart from historic and religious attractions, budding sectors of Indian tourism include rural/agri-tourism, cruise tourism, and wellness (medical) tourism.
Rural/Agri-tourism displays the simplicity of Indian rural life. Tourists enjoy local cuisine, immerse in the rich cultural atmosphere, and purchase agricultural goods. Rural territories showcase native art and culture while promoting social and economic interaction between Indians and foreigners.
Cruise tourism is becoming popular in India because of the country’s scenic coastlines and forests. The government of India enacted policies to renovate infrastructures and facilities across the nation to popularize cruise shipping among both domestic and foreign tourists.
India is one of the top destinations for wellness (medical) tourism because of its therapeutic systems including Panchakarma, Ayurveda, and Yoga. The country is famous for meditation along with physical and spiritual well-being. India’s top medical facilities and well-trained medical professionals also make the country an ideal destination. Between 2009 and 2013, the number of visits for medical purposes doubled.
Eco-tourism and mining tourism in India are both in nascent stages.
Investments into the Industry
According to the Department of Industrial Policy and Promotion, the tourism sector attracted $7.8 billion of foreign direct investment between 2000 and 2015.
The sector is driven by both domestic and foreign investments. Florida-based Vantage Hospitality Group signed a franchise agreement with India-based Miraya Hotel Management. Thai Onyx Hospitality Group set up a joint venture with hotel asset management firm Kingsbridge India to establish seven hotels in India by 2018. India’s Dharampal Satyapal invested $47.5 million in the Carlson Rezidor Hotel in the eastern city of Guwahati. The second largest Indian hotel chain, ITC Hotels, plans to invest $1.4 billion to expand to 150 establishments by 2018. ITC will also launch five other hotels in cities Mahabalipuram, Kolkata, Ahmedabad, Hyderabad and Colombo by the same year. New York’s Goldman Sachs invested $40.4 million into India’s Vatika Hotels, which operates Westin Hotel branches, restaurants, and airport lounges in India.
Incentives are offered especially for projects in certain regions including the Northeast region and the states of Jammu and Kashmir, Himachal Pradesh, and Uttarkhand.
Domestic tourism is also a large contributor to India’s tourism sector. According to the Indian Ministry of Tourism, trips to states and territories within India increased 11.9% from 2013 to 2014.
Major Indian travel agencies, tour operators, and transportation services include:
- Thomas Cook India Pvt. Ltd.
- Cox & King India Pvt. Ltd.
- Kuoni India Ltd.
- Raj Travels & Tour Ltd.