New investment opportunities are opening up in India's tourism industry as market segments grow

India's travel and tourism industry generated US$91.3 billion (Rs.5.949 billion) in 2017 and is expected to double in the next decade. Overseas spending alone totaled US$26 billion (Rs.1,961 billion) last year.

The tourism industry employs around 5% of India's total workforce and received 6.3% of total investment in India valued at US$41.6 billion (rupees 2.705 billion) in 2017. Foreign direct investment (FDI) in this sector is estimated to grow at an average of 6.7% per year.

Several factors characterize this dynamic growth trend.

Among them, the role of international and national technology start-ups stands out, which have introduced many online services and innovative products in the hospitality industry. AirBnb, Makemytrip, Cleartrip, Yatra, Goibibo and OYO Rooms are among the most popular travel and tourism startups that have created easier, cheaper and faster ways to make reservations, find accommodation and organize personalized travel experiences.

Invest in a new travel segment

An estimated 18 million international tourists will visit India in 2018; This number is expected 

to increase to 30.5 million by 2028.

India is rich in history, culture and well-preserved natural landscapes that offer diverse experiences to different tourist segments across the country. In fact, India is home to 35 World Heritage Sites, 10 Biogeographical Zones and 26 Biotic Provinces.

As a result, a diverse portfolio of tourism products is available: cruise and adventure activities, medical and healthcare facilities, international sporting events, business and conference facilities, ecotourism, film festivals, and rural and religious tourism.

The positive growth trends in the traditional segment, the large number of niche and mainstream tourism offers as well as the liberal FDI policy underline the growing investment attractiveness of the Indian tourism and hospitality sector.

For example, tourists interested in rural and traditional experiences can visit Indian temples and historical monuments in the states of Delhi, Gujarat, Rajasthan and Tamil Nadu. The more adventurous can head to the mountains for organized Himalayan trekking or rafting expeditions, and to the east or west coast for scuba diving and snorkeling. India's conservation parks are well organized and the state of Madhya Pradesh has a tiger sanctuary that attracts many tourists from all over the world.

As awareness of alternative forms of medicine grows in western countries, India's expertise in yoga and herbal healing is gaining international recognition. The nutritional and health tourism segment is growing rapidly and the government recently established the Department of Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homeopathy (AYUSH) to coordinate growth and investment in this sector. Currently, AYUSH generates around US$120 billion (Rs.7.8 trillion) per year.

Medical tourism in India has also increased greatly due to the lower cost of major medical procedures, which are typically up to 30% cheaper than in the US or UK. The medical tourism market contributed US$3 billion (Rs 195 billion) in 2017 and is expected to double this year due to easier medical visa regulations. India is a popular destination for elective surgeries such as cosmetic surgery, hip or knee replacements, dental procedures and most commonly for infertility treatments.

Meetings, Incentives, Conferences and Exhibitions (MICE) tourism in India caters to business meetings, international conferences and conventions, events and exhibitions and has attracted the interest of some of the leading hotel brands. India generates around 4.8 billion US dollars (292.7 billion rupees) annually from tourism in this segment.

India liberalizes FDI policy

Tourism is one of India's leading FDI sectors, attracting more than US$10.48 billion (Rs.681.2 billion) in foreign investment over the past decade.

India recently liberalized its FDI policy and now allows:

  • 100% foreign direct investment in auto routes in tourism and hotels;

  • 100% foreign direct investment in tourism construction projects, including the development of hotels, resorts and leisure facilities; ya,

  • 100% FDI in the AYUSH sector, relevant to the health and medical tourism segments.

FDI policies also apply to companies that work with travel agencies, tour operators, tourist transportation (land, air and sea), establishment of cultural, adventure and natural experiences facilities, sports and health units and convention centers.

India also has government incentives such as tax incentives, exemptions from luxury goods tax, goods and services tax or stamp duty, in addition to concessions on electricity tariffs and license renewals that are being facilitated to attract investors to locate in certain areas of the country. .

Amazing India 2.0

India's 2018 Federal Budget announced the Incredible India 2.0 initiative to develop hospitality through investments in tourism infrastructure.

The Swadesh Darshan and Pilgrimage Rejuvenation and Spirituality Augmentation Drive (PRASAD) program aims to increase investment in tourism.

13 themed circuits are being developed under the US$109 million (Rs.7.8 billion) Swadesh Darshan Scheme.

In addition, US$15.4 million (Rs. 1 billion) in federal funding will be made available to beautify and maintain the pilgrimage centers under the PRASAD programme.

In order to increase the suitability of these projects, public-private partnerships (PPP) were introduced in both initiatives.

Businesses can make proposals to state governments that, if approved, guarantee state funding and tax breaks.

Another federal initiative to promote tourism

  • e-ticketing for cultural venues;

  • Multilingual service line for foreigners;

  • India's digital program to promote online service providers;

  • online database of cultural performances and performances;

  • E-Tourist Visa facility for eligible countries;

  • UDAN program to promote travel to small heritage sites by reducing air fares;.

  • port improvements for cruise tourism; ya,

  • New golf tour.


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