India is on a high growth path and with tourism-friendly policies initiated by the government, we are optimistic that this will continue in the upcoming budget coupled with sustained delivery on ground. The tourism industry is one of the largest and most dynamic sectors globally, accounting for more than a third of the total service trade. The UNWTO also expects the sector to provide 296 million jobs globally by 2019. Recent tourism statistics reveal that both domestic and foreign tourism are on a robust growth path. India's rising middle class and increasing disposable incomes have also contributed to this continued growth in domestic and outbound tourism.
This is reiterated in the data shared by the Ministry of Tourism that from 2010 to 2015, we saw an 8.7% increase in total outbound trips to 19.9 million in 2015. The inbound tourist volume also grew at a Compound Annual Growth Rate (CAGR) of 6.8% during 2010-15.
The contribution of the travel and tourism industry is expected to grow by 7.9% per annum to ₹6115.5 billion (2.4% of GDP) by 2026.
According to the World Travel & Tourism Council (WTTC), the contribution of the travel and tourism industry is expected to grow by 7.9% per annum to ₹ 6115.5 billion (2.4% of GDP) by 2026. Keeping this in mind, we are hopeful that the upcoming Union budget will provide a vital and much-needed boost to the sector.
Given the significant value contribution by the travel and tourism industry, a long-pending expectation is that the sector be given industry, export and infrastructure status.
A key initiative that changed India's economic outlook in late 2016 was the move to demonetisation, which impacted the travel sector as well. While organised players in the sector, who were offering cashless modes of payment, have been able to cope with the change, the larger issue is that of promoting digital payment solutions. We look forward to the budget incorporating measures to help boost cashless transactions, in turn facilitating seamless and easy online travel bookings and benefits for consumers.
Critical elements of infrastructure, enhanced connectivity and uniform tax reforms will create significant impact in enhancing leisure, business and MICE Travel, and all categories of specialised tourism in and out of the country.
The current challenges include high taxes on the sector, tourist safety (especially for women travellers) and sanitation—budget 2017-18 offers scope to bridge these gaps. Reinforcing the "Incredible India" brand through the creation of new tourist circuits, key infrastructure and rail-roadway connectivity via a hub and spoke model would be mission critical. This must be coupled with effective marketing communication to reiterate the position of India as a top leisure and MICE destination.
With data highlighting the strong potential of women travellers—domestic as well as inbound—there is an urgent need to look into their concerns of safety and security. This should be a priority if India is to leverage this segment.
With the rapid growth of experiential travel, trends like homestays and village stays would not only extend the market and include lesser known destinations, but also drive volume growth. A valuable outcome is also the opportunity to simultaneously create employment for middle/rural India and thus promote skill development. Budget outlay to such innovative schemes would serve to further catalyse the tourism sector.
The current challenges include high taxes on the sector, tourist safety (especially for women travellers) and sanitation—budget 2017-18 offers scope to bridge these gaps.
The Ministry of Tourism has highlighted an increase in Foreign Tourist Arrivals (FTAs) by 13.5% year-on-year in September 2016, with Foreign Exchange Earnings (FEEs) from tourism increasing 1491% year-on-year in August 2016—an extension of ETA/ e-visas will serve well to add further momentum to this high potential inbound growth story.
This year the Railway Budget will be presented alongside the Union Budget and we are hoping for the government to announce developments in terms of security and modernisation and ensure a positive outlook for rail travel. We look forward to the introduction of high-speed trains on popular routes in order to reduce travel time. The development of airports in tier 1 & 2 cities will also benefit both the aviation industry and travellers. We also anticipate a lowered GST on travel-related services and the government investing heavily in the development of travel infrastructure.
Given that we live in an age of strong competition from global destinations, tax rates should be on par with global standards to ensure a level playing field and to inject viability into the sector. The standardisation/uniformity of taxes across states is also vital in this context.
Indian tourism and allied industries have evolved as key drivers of development, employment and contributors to the GDP. Tourism in India has significant and yet underleveraged potential considering the country's rich historical, cultural, social and geographical inheritance
I am hopeful that in the Union budget 2017, the government will work towards gaining momentum in these areas and achieve its projected growth path in the coming year.