Role of Tourism Industry in Generating Foreign Exchange



Role of Tourism Industry in Generating Foreign Exchange

1.1 What is foreign exchange?

Where money from one country is exchanged for that of another. The system by which one currency is exchanged for another; enables international transactions to take place. The Indian foreign exchange reserve position continues to be buoyant with reserves standing at US$1,35,658 million in the week ending Feb 25,2005. Foreign currency assets were US $ 129844 million, US $ 2,692 higher than previous week's figure. Compared to their last year figure this variation is of the amount US $ 22,699 million, RBI weekly statement reported. Exchange reserves have continued to rise for over some months except for week ended Feb 5, 2005, when it fell marginally to Us $ 1,28, 914 million from previous week's US $ 1,29,720 million. In tourism, when a foreign tourist spends even a rupee, that is considered as a foreign exchange earning for the country. 1.2 History on Tourism.

The first nomad, who wandered with his movable dwelling in search of food and shelter from one place to another, must have been struck by the variations of ecology. This must have been a pleasant experience for him. The shift from unintended pleasure out of travel to traveling exclusively for pleasure constitutes the history of tourism, which is closely related to man’s economic growth, cultural and political development. Once the man had settled on the land or found a place under the sun, which he called home, movement from that to any other place brought out the meaning of travel into the open.


Role of Tourism Industry in Generating Foreign Exchange

1.3 On Tourism Industry Tourism is the largest export industry in the world. International tourism is the largest single item in the world’s foreign trade and for some countries it is already the most important export industry and earner of foreign exchange. The impact of tourism on national economies is becoming increasingly important today because of the growing size of the tourist market. It is recognized so by the World Bank and the World Tourism Organisation. 27 September has been earmarked as World Tourism Day. Tourism is the world’s largest export industry today. According to World Tourism Organisation international tourist traffic in 1997 was 613 million which generated receipts of about US$444.0 billion. It is estimated that tourism accounts for about 8 percent of the total world exports and more than 30 percent of international trade in services. It is also estimated that travel and tourism provide employment to 212 million peoples directly or indirectly accounting for about 10.7 percent global work force. The travel and tourism sector creates more jobs per million rupees of investment than any other sector of the economy and is capable of providing employment to a wide spectrum of seekers from the unskilled to the specialized, even in the remote parts of the country.


Role of Tourism Industry in Generating Foreign Exchange

Chapter 2 World Tourism


Role of Tourism Industry in Generating Foreign Exchange

2. World Tourism
According to the preliminary result of World Tourism Organisation the number of foreign tourist arrivals in 2005 has increased by 5.5%. This growth in 2005 was preceded by the growth of around 10% in 2004. For the first time in year 2005 the number of foreign tourist arrival has crossed 800 million mark (808 million) from 766 million in the year 2004. Though this growth is not great compared to previous year, it is still above the “long term annual growth rate of 4.5%”. The Asia Pacific region experienced growth of around 7%S with India’s tourism growing at around 13%. This growth in world tourism is expected to slow down on 2006, around one percentage point, but still remaining above the industry average. There has been a global tourism boom in recent times. International tourism has been performing better than world trade. Tourism receipts have registered a higher growth than that of world export in services and merchandise exports. The world tourist traffic increased by 3 per cent during 1997 and the regions which benefited the most were Africa with an increase of 9.2 per cent and South Asia with a growth of about 4.9 per cent. It is projected that the international tourist traffic will increase to about 1602 million by registering a growth of about 4.3 per cent during the period upto 2020. The South Asia Region including India is expected to record a higher growth of 6.1 per cent.


Role of Tourism Industry in Generating Foreign Exchange

Fig 2.1: International Tourists Arrival In Millions


Role of Tourism Industry in Generating Foreign Exchange

Fig 2.2:- Graph On International Tourists Arrivals

Fig 2.3 :- Graph On International Tourism Receipts


Role of Tourism Industry in Generating Foreign Exchange

Fig 2.4 :- International Tourism Receipts In Billions US $


Role of Tourism Industry in Generating Foreign Exchange

2.1 World Tourism Organisation’s Vision 2020: The World Tourism Organisation, the apex body has tourism few years back predicted that US$ 2000 billion will be generated by the industry within the year 2020 (Bezbarua, 1999) . It has analysed the emerging trends and factors, which will influence the future growth pattern of the industry. Some of the important observations of WTO are summarized below.  By 2020, there will be 1.6 billion international tourist arrivals and tourism receipts will rise to a staggering US$2000 billion, globally.  There will be sustained average annual growth rate of 4.3% (for arrivals) and 6.7% (for receipts) throughout the world till 2020.  In spite of this growth only 7% of the world’s population will become potential tourists. Thus according to WTO the industry would be still in infancy even in the year 2020.  The top 10 tourist receiving countries would undergo major changes and China would be receiving maximum number of tourists (estimated to be 137.1 million with a market share of 8.6%) by 2020. Traditional market leader, France would come down to the third position. China will have an average growth rate of 8.0%in tourist arrivals during the period 1995-2020.  There will be changes in the top tourist originating countries. Japan, China, and Russian Federation will emerge as the new major outbound tourist countries.  Though Europe will remain the largest tourist-receiving region, its share will come down to 45% from the present 59%.  South Asia will grow at a rate of 6.1% per annum during the period but its share will grow only up to 1.2% from the present 0.7%.


Role of Tourism Industry in Generating Foreign Exchange

Chapter 3 Tourism Industry in India


Role of Tourism Industry in Generating Foreign Exchange

3. Tourism Industry in India
“The present day tourism, if we take in India with the billion people. With the vast civilization heritage of the country, from the Himalayas to Kanyakumari, J&K, Central India, North Eastern states, Bihar, Western States, the large coastal line, Andaman Nicobar and Lakshadweep Islands have a lot to attract the tourist. It has sea coast in three sides, it has islands. It has snow covered hill region, it has desert and it has thick forest regions. All of them are of natural evolution. Many centuries old monuments, temples, churches and mosques are spread thoughout the country. You will find in many parts of the country all three situated adjacent to each other. It is a treat to watch such type of unity. India has one if the Seven Wonders of the World, Taj Mahal. Any tourist can see the continuity of the enriched civilization of billion people of the largest democracy with multiple religions, multiple languages, and multiple cultures.” Extracts from the Address of President of India at the Inauguration of the 5th Global Travel & Tourism Summit in New Delhi on 8th April 2005.

India – the land to travel to, a haven of tourism delights, a civilization to tour through. Tourists come to India for its wealth of sights, cultural exuberance, diversity of terrain and in search of that special something, an extra punch that only India promises and delivers. Teeming with over a billion people who voice over a million concerns in fifteen hundred different languages, India is where people live with variety, thrive on diversity and are too familiar with largeness to let it boggle them. Mud huts and mansions face off across city streets. Lurid luxury and limp living are inhabitants of the same lane. From the smoky mangroves of the Sunderbans to the steaming Thar Desert, sizzling cities like Mumbai and Delhi to the scintillating villages of Khajuraho and Hampi, from the heights of the Himalayas to the deep blue


Role of Tourism Industry in Generating Foreign Exchange

waters around the Andamans, India is a travel haven – a tour package that frustrates and delights, as demanding as it is rewarding. It demands that the traveller be prepared for its own strange forms of tourism offerings - the crowds at Pushkar, for pushy mendicants at Haridwar, for high commercialism at spiritual retreats. But equally, it means that he be prepared for an overwhelming warmth in the people, ease of conversation, and to be stunned into speechlessness by the beauty, sometimes the manmade and often the natural. India is a country known for its lavish treatment to all visitors, no matter where they come from. Its visitor-friendly traditions, varied life styles and cultural heritage and colourful fairs and festivals held abiding attractions for the tourists. The other attractions include beautiful beaches, forests and wild life and landscapes for eco-tourism, snow, river and mountain peaks for adventure tourism, technological parks and science museums for science tourism; centres of pilgrimage for spiritual tourism; heritage trains and hotels for heritage tourism. Yoga, ayurveda and natural health resorts also attract tourists. The Indian handicrafts particularly, jewellery, carpets, leather goods, ivory and brass work are the main shopping items of foreign tourists. The estimates available through surveys indicate that nearly forty per cent of the tourist expenditure on shopping is spent on such items. India has significant potential for becoming a major global tourist destination. The country witnessed foreign tourist arrivals of 2.75 million in 2001.  Travel and tourism is the second highest foreign exchange earner for India, and the government has given organisations in this industry export house status. The industry is waking up to the potential of


Role of Tourism Industry in Generating Foreign Exchange

domestic tourism as well, with an estimated 4.7 billion domestic trips in 2001. Tourism spending within India in 2001 was US$ 22 billion.  There is considerable government presence in the travel and tourism industry. Each state has a tourism corporation, which typically runs a chain of hotels /motels and operates package tours, while the central government runs the India Tourism Development Corporation. Divestment of these state-run tourism corporations have either already taken place or are in process.  Incoming foreign tourist arrivals have shown a 6% compounded annual growth rate over the last 10 years. The government has realised the potential and has advanced several incentives to promote infrastructure growth in the tourism sector.  Current investments are likely to see hotel room capacity increase by 20% over the next three years, with several international hotel chains entering the hotel industry. Similar growth is anticipated in air travel capacity. Fig 3.1:- Foreign Tourists Arrival To India


Role of Tourism Industry in Generating Foreign Exchange

India’s tourism crossed 3 million mark (3.37 million) in number of arrivals of foreign tourist in the year 2004, showing a remarkable growth of 24% over the previous year. The number if foreign tourist arrivals in 2004, 3.37 million, in India formed 0.44% of total world’s foreign tourist arrivals. The foreign exchange earnings have also grown by 38% to US$ 4810. This growth when compared to world tourism increase of only 10% for the same year is remarkable. This remarkable growth in foreign tourist arrival is also visible in domestic tourism. The domestic tourist arrival in India crossed 300 million mark (309 million) in the year 2003 and reached 367.6 million in year 2004. The total contribution of this sector, direct and indirect, to Indian GDP is around 5.83%.

Fig 3.2:- Foreign Tourists Arrival During Jan-Jul 2003 to 2005


Role of Tourism Industry in Generating Foreign Exchange

This sector is directly and indirectly linked to many other sectors in the economy. A growth in tourism industry affects industries like handicrafts, handlooms, transportation (mainly aviation), real estate (or infrastructure) and many more. One of the major sectors to which tourism is linked to is Real Estate. Both these sectors act complementary sectors to each other. More the number of tourist arrivals, more is the requirement if better infrastructure, hotels, restaurants, houses etc. The point to be noted over here is that this real sector is not a stand alone sector. It is further linked to more than 200 different sectors like cement, steel, glass, electrical, water supply, carpentry, transportation and many more. Another major aspect of tourism industry is the employment opportunities attached to it. Tourism industry is the largest employer on the world. In India, the direct employment from tourism contributes to 4.59% of the total


Role of Tourism Industry in Generating Foreign Exchange

employment in the country. Adding the indirect employment to it, the figure goes up to 8.27% i.e. the total employment generated by the industry in India id around 40million. Also, 50% of this employment is indirect. This means that the growth in this industry has a strong impact on the employment in other industries also.

Fig.3.3 :-Foreign Exchange From Tourism (in Cr.)


Role of Tourism Industry in Generating Foreign Exchange

Fig 3.4 :- Foreign Exchange Earnings Through Tourism


Role of Tourism Industry in Generating Foreign Exchange

Fig 3.5 :- Graphical Representation of Foreign Exchange Earnings


Role of Tourism Industry in Generating Foreign Exchange

Chapter 4 Global Status & Trends

4. Global Status & Trends


Role of Tourism Industry in Generating Foreign Exchange

Although global recession and the September 11, 2001, events are estimated to have resulted in a temporary decline in travel and tourism demand in 2001-02, international and domestic tourism is expected to boom over the next two decades. The World Travel and Tourism Council (WTTC) estimates a 4.5 percent per annum increase in the total amount of travel and tourism economic activity between 2003 and 2012. This is largely attributed to a rise in global wealth, liberalization of international airspace, cheaper flights and the use of the Internet as a travel tool. The earnings from tourism have made it one if the worlds largest industries and the fastest growing sectors of global trade accounting for 10.7% of global gross domestic product(GDP), 12.8% of global exports, 8.2% of global employment (0r one in every 12.2 jobs). And 9.4 % of global capital investment. Tourism in the least developed countries is growing faster than the world average, holding the promise of prosperity for many; International tourist arrivals worldwide reached 698 million in 2000, generating $595 billion revenues. International tourism flows are expected to reach 1.5 billion by 2020 and revenue estimated to cross $2000 billion. Today, only 3.5 percent of the world population travels internationally but the number if Asian, particularly Chinese. Tourist is predicted to grow enormously as the region becomes more integrated with the global economy. The scale of world domestic tourism, on the other hand, exceeds world international tourism by a ratio of 10:1. In India, for every international tourist, there are 80 domestic tourists. Domestic tourism can form the basis of a viable and sustainable tourism industry in India.


Role of Tourism Industry in Generating Foreign Exchange

Chapter 5 Global Market Trends

5. Global Market Trends


Role of Tourism Industry in Generating Foreign Exchange

Consumer trends in tourism are gradually changing and require an appropriate response in terms of both policy formulation and investment. Current market trends indicate that:  Long haul travel will grow faster than intra-regional travel. A growth of 24 percent is expected by 2020.  People with less time for leisure are likely to take more frequent but shorter The trips nearer home, opening up opportunities for ‘neighbouring country’ tourism.  experienced traveler wants authentic, off-the-beaten-track vacations in remote and less well-known places as against luxurious five-star vacations, leading to an interest in rural and ethnic tourism.  The increase in the number if people with lots of money but little leisure time has resulted in a growing emphasis on rest and relaxation, and ‘wellness’ and ‘health’ holidays.  The elderly population in key tourism-generating markets has shown a preference for cultural tourism against sun-and-sand vacations.   There is notable and increasing interest in spiritualism. The demand for eco-tourism and nature-based holidays is expected to double and even triple on the next 20 years.  Sports and adventure holidays continue to be popular with the young. The interest in cultural tourism, spiritualism, ‘wellness’ holidays, ecotourism and rural tourism would tend to favour India, provided the country can avail of the opportunities offered to maximize its natural advantages in these areas. The development of new tourism products and destinations during the Tenth Plan must be based on market research and demand, keeping the source markets and the age group of the tourists on mind.


Role of Tourism Industry in Generating Foreign Exchange

Chapter 6 India’s Place in World Tourism.

6. India’s Place in World Tourism.


Role of Tourism Industry in Generating Foreign Exchange

In Asia, China has emerged as a leading tourist destination and is poised to become the world’s top tourist destination by 2020. The WTTC has identified India as one of the world’s foremost tourist growth centres in coming decade. After Turkey, India is expected to achieve the fastest growth of the total amount of economic activity likely to be generated by travel and tourism, at 9.7 percent over the next 10 years. Also, the largest employment creation in China is expected to take place in India over the same period. The growth in ‘visitor exports’ or spending by international tourists, is likely to be fastest in India at 14.3 percent per annum over the next decade. On the whole, the WTTC forecast for India is promising, subject to key policy issues that affect the growth of the sector being addressed. If India is to realize its enormous potential in tourism it must provide exclusive world-class tourism products and destinations to compete successfully for a larger share of the Asian tourism market. Today, outbound tourism from India far exceeds visitor traffic to the country partly because there is a lack of world-class destinations within the country and partly because the domestic tourism policy has been largely directed towards those in the lower end f the spending spectrum. The scope and reach of domestic tourism will have to be broadened in the Tenth Plan through the development of competitive destinations that match international standards in terms of price and also satisfy the international traveler. India’s international arrival figures have not been able to keep pace with neighbouring countries and have been exceeded by Thailand, Malaysia, Indonesia, Dubai and the Maldives. Since 1995, India’s share of the world market has remained virtually stagnant at 0.38 percent, while domestic tourism has grown at a phenomenal rate and India now accounts for 4.6 percent of domestic tourism worldwide. In terms of tourism receipts, India has shown relatively buoyancy because handicrafts items and particularly in diamonds. The Tenth Plan visualizes a mutually


Role of Tourism Industry in Generating Foreign Exchange

supportive role of tourism and handicrafts by encouraging haats and shilpgrams and recognizing shopping as an integral part of tourism experience to promote the ‘Made in India’ brand.

Fig 6.1 :- Share Of Top Ten Countries In International Tourists Arrival

Fig 6.2 :- Share Of Top Ten Countries In International Tourism Receipts During 2004


Role of Tourism Industry in Generating Foreign Exchange


Role of Tourism Industry in Generating Foreign Exchange

Chapter 7 India’s Tourist Profile

7. India’s Tourist Profile
India receives the largest number of overseas tourists from the United Kingdom, which is its largest source of market, followed by the United


Role of Tourism Industry in Generating Foreign Exchange










Singapore. Of the tourists coming to India. 27.5 percent are in the age group of 35-44 years, 23.4 percent in the age group of 25-35 years and 20.8 percent in the age group of 45-54 years. Women constitute only 30.5 percent of India’s total international arrivals. Repeat visitors account for 44.9 percent of the overseas visitors. A substantial number of these may be non-resident Indians, as hotel reservations do not correspond to the number of international arrivals in the country. The average length if stay of foreign tourists in the country in 1998 was 31.2 days. Domestic tourism, on the other hand, is largely pilgrimage-oriented and requires improvement in travel facilities and pilgrim destinations. Fig 7.1:- Top Ten International Markets for India During 2004


Role of Tourism Industry in Generating Foreign Exchange

Chapter 8 Domestic Tourism

8. Domestic Tourism


Role of Tourism Industry in Generating Foreign Exchange

The potential of domestic tourism has grown substantially during the last few years. As per the figures reported by the State Governments, the An important feature of the domestic tourist visits in the accommodation establishments during 1999 are roughly estimated to be 176 million. domestic tourism sector is its contribution to national integration and creation of a harmonious social and cultural environment.

The Committee notes that plan allocation for Domestic campaign during 1999-2000 and 2000-2001 were decreased from Rs.4.50 crores to Rs.3.50 crores and from Rs.3.00 crores to Rs.2.00 crores respectively at the RE stage. Now during 2001-2002 (BE), Rs.3.00 crores have been allocated for Domestic Campaign (including fairs and festivals and craft Melas). When asked for the reasons for reduction of funds for domestic tourism at the RE stage, the Department of Tourism stated that the same was reduced on account of the additional expenditure envisaged for the Pacific Asia Travel Association (PATA) conference 2001. When asked why proper attention has not been by paid to the domestic campaign, the Department of Tourism have replied that the Department is paying due attention to the Domestic Campaign within the available resources also through release of advertisements in the local media, celebration of local festivals in different states and special exhibitions, etc. The amount allocated during decisions and release of advertisements. Tourism Day, Baudh Mahotsav, etc. 20002001 was allocated for launching of campaigns in Print Media on important The Department was to launch In addition to the above, promotional campaigns on important events such as Sindhu Darshan, World advertisements will also be released in local travel media and tourism supplements of newspapers, journals. done by the States. It has also been stated that advertising within the country for attracting domestic tourists is mainly


Role of Tourism Industry in Generating Foreign Exchange

The Committee feels that domestic tourism is the mainstay of Indian Tourism. The Committee has been constrained to note that the Department of Tourism has not been giving proper attention to the Domestic Campaign. The reason stated by the Department of Tourism for reduction for allocation at the RE stage during 2000-2001 is also not convincing. The Committee recommends that greater attention be paid to the Domestic Tourism because it creates more jobs than any other sector for every rupee invested. tourism It also creates the jobs at the local level, dispensing with the In fact, plays a major role in promoting large-scale employment need of migration to distant places for earning of livelihood.

opportunities. Also, the vast number of domestic tourists visiting different parts of the country every year return with a better understanding of the people living in the different regions of the country and the geographical, biological and cultural diversity of India. Multifarious fairs and festivals occur throughout the year and are an amalgam of India’s rich cultural heritage. They have added a new Financial support, material dimension to the Department of Tourism’s promotional efforts. financial assistance for is extended in the form of publicity publicity

assistance is given to various State Governments to promote specific fairs, particularly releasing advertisements, printing

relating to the fairs/festivals and also for creating semi/permanent assets. A small proportion of the outlay is proposed for special campaigns. These are launched from time to time based on actual needs and requirements of the market and would mostly be in the nature of release of advertisements in trade journals as well as in general newspapers and magazines. The Committee enquired as to what was the criteria/policy regarding distribution of amount earmarked for domestic publicity between English and the regional/vernacular print media. The Committee was informed that at the moment there is no policy in this regard.


Role of Tourism Industry in Generating Foreign Exchange

The Committee is surprised to know that at present there is no laid down policy with regard to the distribution of amount earmarked for domestic publicity between English and the regional/vernacular print media. The Committee feels that there must be some criteria regarding placement of advertisement in the print media. The Committee observes that India is a country of continental dimensions that includes diverse races, languages and religions. domestic The Committee recommends that allocation for funds for should be adequately distributed between the campaign

English/regional print media so that people belonging to the various languages and the different sections/segments of the society become aware of the campaign launched by the Department of Tourism.

Fig 8.1 :- Domestic Tourist Visits


Role of Tourism Industry in Generating Foreign Exchange

Fig 8.2 :- Graphical Representation of Domestic Tourist Visits


Role of Tourism Industry in Generating Foreign Exchange

Fig 8.3 :- Share Of Top Ten States In Domestic Tourism During 2004


Role of Tourism Industry in Generating Foreign Exchange

Chapter 9 Tourism In India (2004-2005)


Tourism In India (2004-2005)


Role of Tourism Industry in Generating Foreign Exchange

9.1 India Tourism in 2004 The year 2004 has been a highly successful year for India tourism. The foreign tourist arrival crossed the 3 million figure with arrivals estimated at 3.37 million. The foreign exchange earnings also recorded an unprecedented growth of about 38% with receipts at US$ 4810 million. The growth of about 24% in foreign tourist arrivals during 2004 was achieved over and above a growth of about 14% witnessed in the year 2003. This was achieved despite the fact that the world over, there was a decline of about 1.5% in tourist arrivals in 2003, and only a growth of 10.7% in 2004. This has been possible mainly due to the attempts made by Government to:   improve tourist infrastructure at important destinations/ circuits; focus attention on growth of hotel infrastructure, particularly budget hotels;  enhance the connectivity through augmentation of air seat capacity and improving road infrastructure to major tourist attractions;  directly approach consumers through electronic & print media through “Incredible India” campaign;    create world class collaterals; launch centralized electronic media campaigns; have greater focus in the emerging markets, particularly in the region of China, North East Asia and South East Asia;   use internet and web connectivity; launch road shows in big source markets of Europe.

The Indiatourism also continued to receive international acclaim when it won the ‘Gold Award’ of the PATA in the travel advertisement print category and marketing award in 2004. The Ministry of Tourism also won the 2005 PATA Grand Award in the Heritage category, for its ‘Ajanta


Role of Tourism Industry in Generating Foreign Exchange

Ellora Conservation & Tourism Development Project’ and the PATA Gold Award in the Print Media category for its ‘Incredible - Taj’.

Fig 9.1.1 :- Foreign Tourists Arrival To India During 2003-2005

9.2 India Tourism In 2005 Foreign Tourist Arrival & Share of India in World Arrivals The year 2005 has been a highly successful year so far as tourism in India is concerned. For the third successive year, India witnessed a positive growth in foreign tourist arrivals, reaching a level of 3.92 million against 3.46 million during last year. The growth rate of 13.2% during 2005 was achieved over and above a growth of about 26.8% witnessed during the year 2004; and that the expected growth the world over during 2005 is estimated to be about 5-6%


Role of Tourism Industry in Generating Foreign Exchange

only. With this growth, the share of India in world tourism, which was hovering between 0.38% to 0.39% for number of years, is expected to be around 0.49%.

Fig 9.2.1 :- Foreign Exchange Earnings US $ During 2003-2005

Fig 9.2.2 :- Foreign Exchange Earnings In Crores During 2003-2005


Role of Tourism Industry in Generating Foreign Exchange

Chapter 10 Hotels/Accommodation.


Role of Tourism Industry in Generating Foreign Exchange

10. Hotels/Accommodation.
Accommodation of quality is basic infrastructure for the development of Tourism. The Ministry of Tourism approves hotels from the point of view of their suitability for international tourists. Various incentives and benefits are linked to such approvals. As on September, 1999 there were 1229 hotels with 68032 rooms and on the approved list of Ministry of Tourism. Break up of these hotels category wise is as below: Star Category 5-Star Deluxe 5-Star 4-Star Heritage Hotels 3-Star 2-Star 1-Star To be classified No. of Hotels 55 50 79 62 316 324 146 197 No. of Rooms 12948 6654 6131 1916 15590 11391 5059 8307

8.1 Efforts to Overcome Shortage of Accommodation In order to meet the rising demand of accommodation due to increased growth in tourist arrivals, Department of Tourism brought out guidelines for classification of Apartment Hotels, Time Share resorts and Guest Houses. The Department also sanctioned capital subsidy for 21 budget category hotels and interest subsidy for 160 budget category hotels during last two years. In all 276 hotels in different categories were classified and 230 hotels were re-classified. Approval was granted for 109 hotel projects with 7,206 rooms. In addition, 23 foreign technical collaboration in hotel industry and 9 cases of foreign investments were cleared.


Role of Tourism Industry in Generating Foreign Exchange

Chapter 11 Organisations Involved.

11. Organisations Involved.


Role of Tourism Industry in Generating Foreign Exchange

The organisations involved in the development of tourism in India are the Ministry of Tourism and Culture with its 21 field offices within the country and 18 abroad, Indian Institute of Tourism and Travel Management, National Council for Hotel Management and Catering Technology, India Tourism Development Corporation, Indian Institute of Skiing and Mountaineering and the National Institute of Water Sports for HRD development in the area of Tourism.  Central Government Organisations • • • Department of Tourism Indian Railway Catering and Tourism Corporation Limited (IRCTC) Syama Prasad Mookerjee National Institute of Watersports (NIWS)  State Government Organisations • • • • • • • • Chandigarh Industrial and Tourism Development Corporation (CITCO) Delhi Tourism and Transportation Development Corporation (DTTDC) Directorate of Information, Publicity and Tourism, Andaman and Nicobar Himachal Pradesh Tourism Development Corporation Limited (HPTDC) Karnataka State Tourism Development Corporation (KSTDC) Kerala Tourism Development Corporation Limited (KTDC) Madhya Pradesh State Tourism Development Corporation Limited (MPSTDC) Maharashtra Tourism Development Corporation (MTDC)


Role of Tourism Industry in Generating Foreign Exchange

• • • • • • • • • • • • • • • • • • • • • • 

Meghalaya Tourism Development Corporation Limited Patnitop Development Authority Punjab Tourism Development Corporation (PTDC) Rajasthan Tourism Development Corporation Limited (RTDC) Sun Temple, Konark Tamil Nadu Tourism Development Corporation (TTDC) Tourism and Civil Aviation Department, Himachal Pradesh Tourism Corporation of Gujarat Limited (TCGL) Tourism Department, Andhra Pradesh Tourism Department, Arunachal Pradesh Tourism Department, Chhattisgarh Tourism Department, Goa Tourism Department, Goa Tourism Department, Gujarat Tourism Department, Haryana Tourism Department, Jammu and Kashmir Tourism Department, Kerala Tourism Department, Nagaland Tourism Department, Orissa Tourism Department, Pondicherry Tourism Department, Uttar Pradesh Tourism Department, West Bengal

Others • • • Institute of Hotel Management, Catering Institute of Hotel Management, Catering National Rail Museum (NRM) Technology and Applied Nutrition, Bangalore Technology and Applied Nutrition, Goa


Role of Tourism Industry in Generating Foreign Exchange


Palace on Wheels

In 1996 a public sector corporation was set up under the Ministry to pioneer the development tourism infrastructure specially hotels in the country. The present network of ITDC comprises 26 Ashok Group Hotels, 6 Joint Venture Hotels, 5 Restaurants, 11 Ashok Travel and Transport units, 29 Duty Free Shops at 6 Airports and a Down-Town Duty Free Shop in Delhi. The Government is actively considering disinvestment of ITDC to ensure private participation. A radical turnaround has been recorded in ITDC from a turnover of Rs.184 crore with a net loss of over Rs.37 crore in 2001-02, to a turnover of Rs.379.78 crore with a net profit of Rs.39.03 crore in 2005-06. This includes total turnaround in flagship Ashok Hotel from a turnover of Rs.35 crore (Net loss of Rs.15.09 crore) in 2001-02 to a turnover of Rs.93.03 crore (net profit of Rs.26.29 crore approx.) in 2005-06.


Role of Tourism Industry in Generating Foreign Exchange

Chapter 12 Strategy in the IX Plan.


Role of Tourism Industry in Generating Foreign Exchange

12. Strategy in the IX Plan.
The basic strategy during the 9 t h Plan is to establish effective coordination with all the relevant agencies to as to achieve synergy in the development of tourism. For the 9 t h Plan period (1997-2002), the Planning Commission has approved a Plan outlay of Rs. 793.75 crores for the Ministry of Tourism comprising Direct Budgetary Support of Rs. 485.75 crores and internal and external resources of Rs. 308.00 crores. Tourism development is a composite subject and does not necessarily mean the development of only the tourism facilities like hotels, restaurants, recreational activities etc. In fact, creation of tourism infrastructure will be meaningful only if the areas has the minimum basic amenities and infrastructure like roads, water, electricity, sewerage and telecommunication facilities. This aspect has given importance in the Tourism 'Synergy' programme. The State Governments have been asked to prepare Master Plans for the development of tourism based on the same concept.


Role of Tourism Industry in Generating Foreign Exchange

Chapter 13 Tenth Plan Objective.


Role of Tourism Industry in Generating Foreign Exchange

13. Tenth Plan Objective.
Tourism in India has tended to be regarded as an elitist conducted primarily for the purposes of earning foreign exchange. Its vast potential as an engine of growth and employment generator has remained largely untapped. Although, with 25 million jobs, India ranks second in terms if number of persons employed in travel and tourism, yet the contribution of the sector as a percentage share if all employment is amongst the lowest in the world. The Tenth Plan objectives is to integrate with the socio-economic objectives of the Plan by creating 3.6 million jobs a year through the promotion of domestic and international tourism and to enhance India’s share of international tourist arrivals from 0.38 percent to atleast 0.62 percent by 2007. It will mobilize state governments to use tourism as a means for achieving their socio-economic objectives; encourage the private sector to enhance investment in tourism & provide legislative & regulatory support for sustainable tourism & to protect the interests of the industry & the consumer. The policy envisages involving the rural sector in the promotion of rural, heritage, it will adventure remove & the ecotourism to & will & promote resolve the the development of the competitive high quality products & destinations. Most importantly barriers growth contradictions in policy to achieve inter-sectoral convergence of activities that help the growth of tourism.


Role of Tourism Industry in Generating Foreign Exchange

Chapter 14 Indian Tourism Policy Initiatives


Role of Tourism Industry in Generating Foreign Exchange

14. Indian Tourism Policy Initiatives
The Government of India came out with its first ever policy on tourism in 1982. the policy was of a more a statement of intention than a plan for development. It aimed at projecting India as the ultimate holiday destination. The policy suggested granting export industry status to tourism, developing tourist circuits, developing a marketing campaign based in the country, and inviting private sector participation. Several legislative and executive measures followed the tourism policy. In 1987, the Tourism Development Finance Corporation was established with a corpus fund of Rs.1bn and lit disbursed loans at concessional rates for tourism-related projects. In 1988, the National Committee on Tourism set up by the Planning Commission submitted a perspective plan on the tourism industry. The committee recommended structural changes such as replacing the Department of Tourism with the Tourism Board. It suggested the creation of an exclusive cadre if the civil service-the Indian Tourism Service. It also recommended the partial privatization of the national carriers-Indian Airlines and Air India. The seventh five-year plan (1985-86 to 1989-90) also spoke of the basic framework of operational initiatives vis-à-vis the tourism industry. The next major policy initiative came in May 1992 in the form of the “National Action Plan for Tourism”. The action plan contained several objectives, to increase the employment opportunities in the tourism industry; to develop domestic tourism for the budget travelers; to preserve the national heritage and the environment; and to diversify the Indian Tourism product. It aimed to increase India’s share of world tourism to 1% in a span of five years. The plan recommended the development of special tourism areas on the lines of export processing zones, improvement of pilgrimage centers with financial assistance from the central government, and the setting up of a National Culinary Institute. It also suggested the


Role of Tourism Industry in Generating Foreign Exchange

creation of a flexible system for the recognition of travel agent and tour operators. The eight five-year plan (1992-93 to 1996-97) spoke about attracting highspending tourists from Europe ant the US. It also suggested the creation of a “master plan” bky integrating area plans with tourism development. The other thrust areas in the plan included moving away from culture-related tourism to holiday and leisure, adventure, wildlife, etc. In May 2002, the National Tourism Policy was unveiled. This was essentially a rehash of earlier policy and plans. The 2002 policy was, however, ambitious in the sense that it recommended positioning India as a global brand to attract tourists in larger numbers and exploiting the vast potential of India as a tourist destination. In the same period in the form of “opening of the skies” was introduced with the aim of international tourist arrivals by enhancing air seat capacity and connectivity. 14.1 Policy Initiatives The New Tourism Policy released in May 2002 has outlined the following policy initiatives for the tourism sector:  The new policy is built around the 7-S Mantra of Swaagat (welcome), Surakshaa Soochanaa (information), (security), Sahyog Suvidhaa (facilitation), Sanrachnaa (cooperation),

(infrastructure) and Safaai (cleanliness).  The new policy envisages making tourism a catalyst in employment generation, wealth creation, development of remote and rural areas, environment preservation and social integration. The policy also aims to spruce up economic growth and promote India’s strengths as a tourism destination that is both safe and at the same time exciting.


Role of Tourism Industry in Generating Foreign Exchange

The policy proposes the inclusion of tourism in the concurrent list of the Constitution so as to enable both the central and state governments to participate in the development of the sector.

No approval is required for foreign equity of up to 51 per cent in tourism projects. Enhanced equity is considered on a case-to-case basis. NRI investment is allowed up to 100%. Approvals for Technology agreements in the hotel industry are available on an automatic basis, subject to the fulfillment of certain specified parameters. Concession rates on customs duty of 25% for goods that are required for initial setting up, or for substantial expansion of hotels. 50% of profits derived by hotels, travel agents and tour operators in foreign exchange are exempt from income tax. The remaining profits are also exempt if reinvested in a tourism related project. Approved hotels are entitled to import essential goods relating to the hotel and tourism industry up to the value of 25% of the foreign exchange earned by them in the preceding licensing year. This limit for approved travel agents/tour operators is 10%. Hotels located in locations other than the four major metro cities are entitled to 30% deduction from profit, for a ten-year period. The expenditure tax has been waived in respect of hotels located in the hills, rural areas, places of pilgrimage or specified place of tourist importance.


Role of Tourism Industry in Generating Foreign Exchange

Chapter 15 Leakages


Role of Tourism Industry in Generating Foreign Exchange

15. Leakages
Though the tourism industry is booming and helping both Indian and world economies to grow, there are a few downsides to this industry. A huge seasonal employment exists in this sector. This seasonal employment is mainly in developing countries where tourism industry is not much developed. In these countries for a few months the tourism is low and comparatively fewer workforces are required. In India, the months of April, May and June are low on foreign tourist arrivals. Apart from these employment issues, another limitation to the industry is “leakage”. The term Leakage means that out of the total amount of money spent on the tourism of a country, a major part leaks out of that country (mainly developing) to the other countries (mainly developed). This leakage occurs when the host country wants to provide international facilities to their tourists. This leakage can be “internal leakage” or external leakage”. Many times the tourists’ arriving the host country demand for the goods like some equipment, food, drinks etc. which the host country cannot provide them. This leads to internal leakage because to fulfil the needs of tourists, the host country has to import these goods from other countries. External leakage occurs because; these host countries (mainly developing) might not have enough capital to build an infrastructure to attract foreign tourists, which calls for an investment from foreign countries (mainly developed). Now these external investors are a part of their business and will take a major part of there earnings. In India the leakage is around 40%, i.e. 40% of the earnings generated by India’s tourism leaks out of the country. This leakage is significantly high and is a cause of worry. But, compared to other developing nations, this figure is still better. The average leakage of developing nations is around 80%, which is very high as compared to leakage in India. The reasons for this are the improving infrastructure of major tourist destinations, the escalation in international standard Indian hotels like TAJ Group of Hotels, ITC Welcome Group, Oberoi Hotels etc.


Role of Tourism Industry in Generating Foreign Exchange

Chapter 16 Barriers to Growth


Role of Tourism Industry in Generating Foreign Exchange

16. Barriers to Growth
There are several factors that are responsible for adequate growth of the tourism sector in India. These are :     Barriers related to approach Barriers that discourage private investment Factors that affect competitiveness. Factors that affect the long-term sustainability.

The effective & early removal of these barriers during the tenth plan is an essential determinant for the success of new tourism policy. 16.1 Approach-Related Barriers The need for a national consensus on the role & the level tourism development in the country has been voiced repeatedly but a concerted effort to achieve a consensus has not been made. Tourism should be limited by state or regional boundaries if distortion in policies is to be avoided .It us important that the consensus among all states is evolved through the National Development Council (NDC) & the barriers to the growth of tourism removed. Tourism has been denied the priority it deserves over successive plan periods because its potential as a engine of economic growth has not been appreciated. This is visible in the low allocation of resources. Allocation to tourism has averaged 0.16% to the total plan outlay from the third plan to the ninth plan. In the Tenth Plan , it is likely to receive an allocation of 0.72% .According to the WTTC , India is one of the lowest spendors of tourism-153 r d out of 160 countries , while its neighboring competitors & China invest far more : Malaysia (5.1% ) , Nepal(5%), Indonesia (8.4%), Maldives (15.7%) , China (3.8%) . The growing domestic & international demand, which is set to boom, reinforces the need for higher investment.


Role of Tourism Industry in Generating Foreign Exchange

Failure to measure up

to additional investment demand for domestic

tourism is likely to lead to the over exploitation of existing facilities, discouraging foreign investors while leading to an increase in the outflow of high spending domestic tourists from the country. Most state government gives scant importance to tourism even though they virtually control the tourism product located within their boundaries. They are responsible, inter-alia, for local infrastructure, transport system, sanitation & hygiene, leisure & recreation, law & order, the upkeep of local monuments & the general well being of the tourist. Their support & participation is essential for tourism to succeed & spread its benefits among the host population. Their lack of interest has resulted in an unprofessional ad hoc approach that acts as a deterrent to the growth of tourism. The approach of the state governments need to be focused, highly professional & result- oriented if India is to avail of the opportunity that the currently favorable market trends have to offer. 16.2 Barriers That Discourage Private Investment Apart from the State Governments the private sectors plays a vital role in the growth & development of tourism. Although the central government & certain state governments have, from time to time, announced incentives to involve the private sector in tourism development, the results achieved have fallen\n short of expectations. To provide a conducive environment for private sector investment it is important to realize that the travel & tourism sector is adversely affected by the lack of synergy in inter-sectoral policies. The growth of the sector requires well integrated & coordinated policies & stability & approach. Contradictions & arbitrary changes in policy send confused signals to the investor. Unless infirmities in policy are expeditiously removed well before the end of the Tenth Plan period the new tourism policy is unlikely to succeed.


Role of Tourism Industry in Generating Foreign Exchange

16.3 Factors that Affect Competitiveness Being a long haul destination, India is more conveniently accessible by air and cannot be easily reached by rail or road. A restrictive air transport policy has a very deleterious effect on tourist traffic. There are insufficient connections to most tourism destinations. The situation could be eased if the large number of regional airports could open up as international airports. The existing international and national airports also require improvement. The price of aviation turbine fuel needs to be lowered to make air transport competitive and affordable. Today, it is cheaper to travel by air to neighboring countries from India than to travel to certain parts of India itself. A more liberal aviation bilateral regime and a new aviation policy to benefit the economy of the country as a whole rather than the national carriers alone would greatly aid the development of tourism. Central and state governments need to evolve a taxation regime, which is revenue generating without being burdensome. Accommodation and transport taxes tend to be very heavy in certain states while the excise policy in others is extremely harsh. The land policy in some states makes the setting up of a hotel a formidable exercise and as many as 48 clearances are required for the construction and running of a hotel. Such policies deter private sector investment. The importance of protecting private investment in tourism must also be appreciated and activities such as mining, unauthorised construction, encroachments and haphazard development around tourist resorts must be prevented through appropriate legislation and public support. As tourism is a highly competitive industry; the traveller has a wide range of choices and looks for good value for money. The lack of quality infrastructure, uncompetitive rates, indifferent or poor product quality, difficulty in getting access to information on travel and tourist destinations, untrained service providers, and above all, the lack of hygiene, have an enormously negative effect on the competitiveness of the


Role of Tourism Industry in Generating Foreign Exchange

tourism product. A world class destination requires professional planning to prevent haphazard, uncontrolled growth, spatial and land use planning, strict architectural controls, sewerage infrastructure and water treatment plants. It requires improvement of entry points and appropriate facilitation services. The lack of a visa-on- arrival regime on account of security considerations places India at a disadvantage vis-à-vis its competitors. It is necessary that India strikes a balance between security considerations and the need for tourism development and reviews its visa policy to permit tourists from its major source markets to obtain visas on arrival. Equally important is the behaviour of the host population. Training programmes are required not only for hotel managers but also for tourist guides, taxidrivers, staff at eating places, porters etc., as the manner in which they conduct themselves affects the tourist’s experience of the country. Important do’s and dont’s in terms of a code of ethics need to be inculcated among the service providers. During the Tenth Plan, the Department of Tourism will organise capacity building programmes for service providers through mobile training units. 16.4 Factors Affecting the Long-Term Interest of Tourism A major impediment to the growth of tourism in India has been the lack of awareness about the benefits that it can bestow upon the host population. Unless the host population, both in the rural and urban areas, is supportive of tourism, it cannot become a vibrant economic force. The rural sector, in particular, has been largely ignored in tourism development and has consequently been deprived of the benefits of employment and income generation accruing from tourism. The Tenth Plan will seek to rectify this, particularly in view of the world-wide interest in rural tourism. While an awareness campaign that elicits local support for travel and tourism is essential for the long-term growth of the sector, it is also important to create awareness about the environmental impact of tourism by generating respect for the carrying capacities of tourist destinations. This is


Role of Tourism Industry in Generating Foreign Exchange

imperative as excessive exposure of ecologically fragile areas to human interference can lead to irreparable environmental degradation. As the demand for ecotourism is expected to grow enormously in the next decade, it is important to have regulations in place to prevent such damage. The local population must be convinced of the need to support such regulations in the interest of long-term sustainability. India’s hill resorts have already suffered seriously from a lack of concern for their carrying capacities and the unchecked influx of tourists during the summer months. If India’s forest sanctuaries and pristine beaches are not to suffer the same fate, attention will have to be paid during the Tenth Plan to obtaining regulatory and public support for sustainability concerns.


Role of Tourism Industry in Generating Foreign Exchange

Chapter 17 Role of Department of Tourism


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17. Role of Department of Tourism
Being the nodal agency for the development of tourism in the country, the department of tourism needs to make greater efforts to co-ordinate and integrate the policies of central ministries that have an impact on the development of tourism and to mobilise state governments and the private sector to develop unique and competitive tourism products and destinations. Crucial decisions affecting tourism are taken by other ministries viz. the Ministries of Finance, Home, Civil Aviation, Surface Transport, Environment and Forests, Urban Development, Rural Development, Ocean Develop-ment etc. The Department of Tourism has tended to concentrate largely on its role as the promoter of international tourism and generator of foreign exchange earnings while paying relatively less attention to inter-sectoral policy co-ordination and the all-important development of tourism infrastructure and product quality. In the Tenth Plan, the Department will redefine and expand its role and work towards intersectoral convergence and policy integration to remove the barriers to the growth of tourism.


Role of Tourism Industry in Generating Foreign Exchange

Chapter 18 Tenth Plan Strategy


Role of Tourism Industry in Generating Foreign Exchange

18. Tenth Plan Strategy
The Tenth Plan strategy is to work towards a national consensus on the role of tourism in national development and to focus on the removal of barriers that hamper its growth. To make public sector investment more effective, it is necessary to work towards the inter-sectoral convergence of policies and programmes that could benefit tourism. The New Tourism Policy envisages a framework, which is Government-led, private sector driven and oriented towards community welfare, with the Government creating the legislative framework and basic infrastructure for tourism development, the private sector providing the quality product and the community providing active support. The overall vision of the development of tourism embodied in the new policy will be achieved through five key strategic objectives. These are:      Positioning tourism as a national priority. Enhancing India’s competitiveness as a tourist destination. Improving and expanding product development. Creation of world class infrastructure. Effective marketing plans and programmes.

18.1 Positioning Tourism As A National Priority A concerted effort will be made, through the NDC, to arrive at a consensus on the role of tourism in the development agenda of the nation. Inclusion of tourism in the Concurrent List of the Constitution will provide constitutional recognition to the tourism sector and enable the central government to legislate for tourism development. A proposal to this effect has been circulated by the Department of Tourism to the state governments for comments and has also been discussed at a Chief Ministers’ conference and a majority of the states have agreed to the proposal. Other initiatives include the setting up of Tourism Advisory Council with key stakeholders


Role of Tourism Industry in Generating Foreign Exchange

functioning as a think tank and the constitution of a Group of Ministers on Tourism to improve policy integration and co-ordination. The adoption of a tourism satellite accounting system is underway to gauge more precisely the contribution of tourism to the national economy. A national awareness campaign in order to create a popular movement in favour of tourism is being planned through a professionally managed communication strategy. Most importantly, the efficiency of public investment in tourism supporting activities will be improved through effective inter-sectoral coordination and prioritisation. 18.2 Enhancing India’s Competitiveness as a Tourist Destination As air capacity available to India is woefully short during the peak travel months, ranging from October to March, especially for the main tourism originating regions such as North America, Western Europe and South Asia, it is necessary to open India’s skies to increase capacity and help enhance tourism. Additional seat capacity from the major tourism generating destinations would significantly benefit the national economy and provide a major impetus to tourism. Improvement in the standard of facilities and services at the international and national airports will need to be speeded up by employing professional manage-ment agencies and by privatising and leasing out airports. To enhance India’s competitiveness as a tourist destination, it is proposed to simplify the visa procedures and consider strategies for the speedy issue of visas including electronic visas and visas on arrival. An attempt will be made, through a consensus, to reduce the heavy and multiple taxes that reduce the competitiveness of the Indian tourism product. Special tourism police will be deployed at major tourist destinations during the Tenth Plan to provide security to travellers and promote India as a safe destination.


Role of Tourism Industry in Generating Foreign Exchange

18.3 Improving And Expanding Product Development Product development strategy during the Tenth Plan will be related to the special interests oftourist target markets. • Cultural and heritage tourism will be expanded. India has a vast array of protected monuments with 22 world heritage sites, 16 of which are monuments. The integrated development of areas around these monuments provides an opportunity for the development of cultural tourism in India. • For the development of beach and coastal tourism, a number of sites on the west coast of India will be identified for the development as beach resorts by the private sector. The sites will be offered on long term lease at preferential terms. These sites will primarily be on the beaches of Goa, Kerala, and North Karnataka because of easier access by air. During the Tenth Plan Kochi in Kerala and the Andaman and Nicobar Islands will be developed as international cruise destinations because of their proximity to internationalcruise routes and their exotic appeal. • India’s unmatched variety of cuisine is becoming increasingly popular in the world and will be developed as a special attraction. It is proposed to create a highly skilled workforce of culinary professionals through an innovative incentive scheme not only for India but also to promote Indian cuisine internationally. • Village tourism will be promoted as the primary tourism product of India to spread tourism and its socio-economic benefits to rural areas. • India’s great wildlife variety has not been developed as a tourist attraction. Wildlife sanctuaries and national parks will become an integral part of the Indian tourism product. Priority will be given to the preparation of site and visitor management plans for key parks. The quality of tourist facilities available at the parks will be enhanced after a prioritisation of


Role of Tourism Industry in Generating Foreign Exchange

parks. Tentatively these will be: Corbett National Park, Kanha National Park, Bandhav Garh National Park, Kaziranga, Madhumali, Bharatpur, Periyar, Ranthambore, Little Rann of Kutch, Chilka, and the Sunderbans. • India has the greatest adventure tourism assets in the world in the Himalayas and its rivers. Mountain-based adventure activities will be developed and promoted. Regulations and safety and conservation are met. • India receives only a minuscule proportion of the global meetings, conventions and exhibition market. It is important that India develops a world class international convention city not just for the sake of tourism development but also for international and domestic trade and commerce.. • India’s most unique tourism product during the Tenth Plan will be holistic healing and rejuvenation packages. In focussing on this, it will capture the essence of Indian culture for international and Indian visitors alike. • India’s fairs and festivals, some of which are already well established such as the Pushkar mela, the Desert Festival at Jaisalmer, the Kumbh Mela etc. will be promoted as unique products of India. The Festivals of India programme will be re-introduced in the top 12 future markets for India initially with an annual event in the United Kingdom and the United States, to be followed by triennial events in the other markets. • Shopping will be recognised as an integral part of tourism. The development of dedicated shopping centres for traditional crafts designed along the lines of village haats such as Dilli Haat and Shilpgram will be encouraged and information on where to procure specific crafts made available through shopping guides. certification for adventure tourism operators will be introduced so that the minimum standards of


Role of Tourism Industry in Generating Foreign Exchange

• Delhi will be positioned as the cultural capital of India supported by an ongoing and vibrant calendar of cultural events. The development of such a niche-based special interest product mix will position India as a unique and competitive destination. 18.4 Creation of World Class Infrastructure The need for physical infrastructure for tourism ranges from ports of entry to modes of transport to destinations (airways, roadways, railways or waterways), to urban infrastructure such as access roads, power, water supply, sewerage and telecommunication. This underscores the need for inter-sectoral convergence of infrastructural schemes and programmes that could support tourist destinations. The road network is vital for tourism as almost 70 per cent of passengers in India travel by road. Many tourist circuits are entirely dependent on roads. The current government plan for the road system in the country covering both inter-state highways and improvements to rural roads directly supports tourism development. There is urgent need to construct and improve highways linking the 22 world heritage sites and places of tourist significance. The Ministry of Road Transport and National Highways will collaborate with the Ministry of Tourism in this effort. The Indian railway system can also become an enormous asset to the development of the tourism and hospitality industry in the country. The railways hold a special fascination for foreign tourists who wish to travel the country. For the vast majority of domestic tourists also, the railways is the most affordable means of travel linking the length and breadth of the country. Introduction of special tourist trains with pre-set itineraries and private sector participation will be encouraged. The Indian Railways plan to establish 100 hotels at railway stations to serve specific tourist centres. The private sector will be given incentives to


Role of Tourism Industry in Generating Foreign Exchange

operate these hotels on long-term leases. These hotels will provide clean and inexpensive accommodation for budget tourists. The Indian Railways also owns a number of heritage structures, which, if effectively maintained and marketed, could serve, both as railway stations and places of tourist interest. India has five hill railways, which compare with the best hill railway systems in the world. The enormous tourist potential of these products will be tapped during the Tenth Plan. As steam-hauled trains like the Royal Orient, Buddha Parikrama, Palace-On-Wheels and Fairy Queen are extremely popular with tourists, steam traction for special tourist segments will be continued. Trains like the Shatabdi and the Rajdhani with a special tourism and hospitality focus will be planned both for foreign and domestic tourists. India’s 7,000-km coastline and her mighty rivers will be tapped for the promotion of cruises. Care will be taken to develop world class tourism products. As the Ministry of Tourism’s financial assistance to the states has not been able to have the desired impact in terms of creating of world class tourism infrastructure, the emphasis must shift to the development of specific travel circuits as internationally competitive destinations and the convergence of resources and expertise for these circuits. The availability of trained manpower is essential to achieve excellence in the tourism sector. At present, there are 21 Institutes of Hotel Management and Catering Technology (IHM&TC) and 13 Food Craft Institutes in the country. In addition, a good number of accredited institutes also cater to the growing demand in the service sector. It is estimated that only 50 per cent of the requirement of the market is met by these institutes. Five new Institutes of hotel management would be set up in the Tenth Plan – three in the newly created states of Uttaranchal, Jharkhand and Chhattisgarh and two in the northeast. In addition, 15 more Food Craft Institutes will be set up in the Tenth Plan, and efforts will be made to take culinary crafts and training to the rural areas through mobile training units. A new scheme on


Role of Tourism Industry in Generating Foreign Exchange

capacity building to train service providers in the unorganised sector such as small hotels, dhabas, restaurants and other eating joints is also proposed. 18.5 Strategy For Effective Marketing As there is fierce competition for tourists from India’s source markets, India needs to change its traditional marketing approach to one that is more competitive and modern. It needs to develop a unique market position, image and brand, which cannot be held by any other competitor. India’s positioning statement will capture the essence of its tourism product to convey an ‘image’ of the product to a potential customer. This image will be related not only to its ancient Vedic civilisation with a cultural heritage that continues to thrive especially in its rural areas but also to its essentially secular nature. In the Tenth Plan, an extensive market research programme will be launched in the target source markets and tourism products developed to cater to the interests of each source market. An effective and ongoing market representation presence will be established with the travel trade in each source market and an Internet portal set up in various languages to provide information, a description of the product and the product requirements of the target market segments. The Internet has a great impact on the marketing of travel and tourism. It has already established itself as a channel through which tourism organizations can promote their destinations and products. Indian tourism will utilise both the Internet and other emerging interactive technologies to avail of the benefits to be gained.


Role of Tourism Industry in Generating Foreign Exchange

Chapter 19 The Path Ahead

19. The Path Ahead


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The tourism sector needs a national consensus on the role and place of tourism in national development and the early removal of impediments that have hitherto handicapped its growth. The Tenth Plan target of the creation of 18 million jobs through tourism requires a substantial investment of Rs. 38,800 crore at the rate of 47 jobs per one million rupees of investment, both from the public and the private sector. The central sector outlay for tourism during the 10th Five Year Plan is Rs. 2,900 crores, the scheme wise break-up of which is given in the Appendix. Public sector investment, though limited, can be made more efficient through the intersectoral convergence of policies and programmes supportive of tourism. An integrated inter-sectoral investment plan that provides effective infrastructural support to tourism through the Ministries of Railways, Surface Transport, Shipping, Civil Aviation, Urban Development, Rural Development and Environment and Forests etc. can be achieved through the preparation of a tourism component plan. Private sector investment can be enhanced by removing the barriers to growth and expediting critical policies that are being evolved. Public and legislative support will be essential for the sustainable development of the sector. The success of the New Tourism Policy 2002 will be largely determined by the success achieved on all these fronts.


Role of Tourism Industry in Generating Foreign Exchange

Chapter 20 The ‘Incredible India’ Campaign
Marketing India to the World

19. The ‘Incredible India’ Campaign 73

Role of Tourism Industry in Generating Foreign Exchange

Marketing India to the World

‘ Before

the Incredible India campaign, India was being promoted differently in different countries, if at all. There weren’t two or three distinct images. This campaign changed that.’ Lavanya Anirudh, Account director, Ogilvy & Mather (India), in 2004. Before 2002, the Government of India (GoI) regularly formulated policies and prepared pamphlets and brochures for the promotion of tourism; however it did not support tourism in a concerted fashion. As a result, the country attracted very few tourists, a country like France, six times smaller than India, attracted around 20 times the number of tourists. India perhaps was an indication of the extent to which previous governmental efforts to promote tourism had been unsuccessful. However, in 2002, the tourism ministry made a conscious effort to bring in more professionalism in its attempts to promote tourism. It formulated an integrated communication strategy with the aim of promoting India as a destination of choice for the discerning traveler. The tourism ministry engaged the services of Ogilvy & Mather (India) (O&M) to create a new campaign to increase the tourist inflows into the country. The “Incredible India” campaign was launched in 2002 with a series of television advertisement. The campaign was based on the striking pictures and themes related to India’s cultural legacy (yoga, ayurveda), scenic locales, etc. The aim of the campaign was to project India as a unique opportunity for physical invigoration, mental rejuvenation, cultural enrichment and spiritual elevation. The campaign was rolled out on some of the major television channels between January and March 2002.


Role of Tourism Industry in Generating Foreign Exchange

The Incredible India Campaign on TV
Channels Discovery Channel Discovery Channel Travel Channel BBC World CNN January 15,2002 January 15,2002 January Period 15-March (8 weeks) 15-March (8 weeks) 2002(2-3 Region Europe, Asia, Middle East & Africa South-East Asia, Australia and New Zealand All Channels

weeks) January2002Europe, Asia-pacific, Australia March2002 (10 weeks) January 2002-March Europe, Asia, Middle East, 2002 (10 weeks) Africa

The campaign also made exclusive use of the internet. In March 2002, the official website of the tourism ministry ( ) was redesigned to make it both more attractive and functional. Prospective tourist could use the website to plan their trip to India. The print ad campaign was complemented by a similar ad campaign on the internet, which focused on specific destinations and themes. The online ad were placed in country-specific travel websites, portals, and search engines. Electronic newsletters and mailers were sent to people who subscribed to the service.

Region-wise Websites Visits
Region Total visits Percentage


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Asia North America Oceania Europe South America Africa

188,116 125,573 37,760 22.853 1,192 1,055 375,549

49.96 33.34 10..3 6.07 0.32 0.28 100.00

In March 2005, a TV campaign “Let us go to India” was launched in Japan and a campaign “Walk with Buddha”, in Thailand and China. Several roadshows were also organized as part of the Incredible India campaign in Milan, Paris, and cities in Serbia and other East European countries. A tram in Berlin, Germany, was painted with the “Incredible India” colours and, it reportedly became the talk of the town. In 2005, the tourism ministry launched several innovative schemes such as ‘Athithi devo Bhava, ‘rural tourism’, and ‘Priyadarshini’ under the Incredible India umbrella. The Athithi devo Bhava program was a social awareness initiative of the ministry to sensitize the general Indian public to; the importance of treating foreign tourists with respect and courtesy. As a part of the program, taxi drivers, guides, immigration officers, tourist police, and other people in select cities like Delhi, Mumbai, Jaipur, Agra, and Aurangabad, who interacted directly with tourists, were trained on personal hygiene, etiquette, English language skills, etc. The “rural tourism” scheme had the twin objective of showcasing the

uniqueness of the arts, crafts, and heritage of rural India and helping the rural folk benefit from tourism. In the first phase, 63 rural areas were identified and Rs. 5 mn was allotted to each area for upgrading approach roads, landscaping, cleaning water bodies, maintaining monuments, etc. the ministry joined hands with Non-government Organisation (NGOs) to provide a unique experience of rural India to discerning tourists. An


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exclusive, was also launched. Similarly under the “Priyadarshini” scheme, the ministry made efforts to bring more women into tourism-related areas. The ministry reportedly spend Rs.1. bn on the Incredible India campaign in 2005. More importantly, the campaign was successful in boosting international tourist travels. “In 2004 Incredible India campaign led to a 36% growth in the US dollar terms and 255 in number of tourists (both domestic and foreign),” said Amitabh Kant, Joint Secretary, Ministry of Tourism. The upward surge in tourist numbers continued in 2005 as well and it resulted in brisk business for hotelier and other tourism-related enterprises. Domestic tourism too received healthy growth levels. The high standards of the campaign were acknowledged when the Indian tourism ministry won the 2004 PATA Gold award for the “Incredible Taj” campaign. Media report suggested that the ministry of tourism was planning to; spend Rs.1.5 bn on the Incredible India campaign in 2006. while around Rs.1 bn was to be spent on overseas promotion and marketing, the remaining was to be allocated for advertising in the print and electronic media. According to projections made by the World Travel and Tourism Council (WTTC), India could expect to earn US$90.4 bn in revenues and crate 28 million jobs from tourism sector by 2014. There was also a general agreement that India could capitalize on its distinct strengths and effectively market itself. However, irrespective of whether or not the “Incredible India” campaign had proved successful in bringing in more tourist and revenues.

Taglines of Tourism Departments of Some States
No State Tagline


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1 2 3 4 5 6 7 8 9

Orissa Kerala Maharashtra Uttar Pradesh Madhya Pradesh Andhra Pradesh Goa Gujarat Andaman

Senic.Serene.Subline Gods Own Country Unlimited Amazing Heritage.Grand Experieces The very heart Of India The Kohinoor Of India Go Goa.The Perfect Holiday Destination Vibrant Gujarat.Where Life is a Celebration Emerald.Blue.And You

Fig 20.1 :- Print Ads Of Incredible Taj


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Print Ads in “Incredible Taj” Campaign that Won the PATA Awards-2005


Role of Tourism Industry in Generating Foreign Exchange

Chapter 21 Conclusion

21. Conclusion


Role of Tourism Industry in Generating Foreign Exchange

Indian Tourism Industry has a strong relationship with the economic growth of the country. As GDP continues to increase, it enhances investment in basic infrastructure like transport system, which is a vital support to tourism in India. Closely associated is the hotel industry in India, which has added to the growth in Indian tourism since 2004. India has become one of the popular tourist destinations in the world. Of course there has been the government’s support through its “Incredible India” campaign, which showed new light to foreign tourists. In 2005 the arrival of international tourists grew by 16% giving boost to Indian tourism.

The Union Financial Budget 2006-07 has allocated Rs.8.5 Bn for Indian tourism sector in the tenth Five Year Plan. Having increased the service tax to 12% there is more expected revenue for the government. With lot of imagination and ideas the Indian tourism sector is gathering momentum and is set to have not only large numbers of foreign tourists but also make a big share in the country’s Gross Domestic Product ( GDP ). Recent statistics have revealed that during the first quarter of 2006, the performance of the tourism industry has been very encouraging which has registered an 11% increase in foreign tourist arrivals. With the given allocation to the Indian tourism industry in the budget, the Government appears to have realized the significance of this sector in earning valuable foreign exchange as also enabling greater employment. As new destinations develop the tourist inflow is anticipated to increase.


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