Tourism and Travel contributes nearly 7% to India’s GDP. Can it be the next big sector?

This week I was on a trip to one of the UNESCO world heritage sites in India. Fascinating is an understatement!

Did you know that India has 40 of these sites?

Yet, tourism as a % of GDP is not very large for India

Foreign Travel – an Import

Roughly 20 million Indians travelled outside India in 2018. This number, though distorted by Covid, is likely to be around 30 million this year. About 6 million of these are on account of leisure travel.

On average, we spend about USD 1200-1400 per capita on these trips. This works out to nearly USD 7 to 8 billion worth of spending, on leisure travel. There is a bit of approximation here, but broadly these would be the numbers.

Remember, foreign travel, is effectively an import, for which we spend foreign currency. While today this number is relatively small given our overall imports, there is only one way it is going to go. China, for example, sends 100 million tourists every year to other countries.

If we reach 20 million foreign leisure travelers by the end of this decade and assuming each one spend USD 2500 on a trip, we are looking at USD 50 billion as imports from outbound tourism. Now this starts assuming larger proportions. To give a sense, we import nearly USD 50-60 billion worth of gold and precious metals, which are one of the top 3 imports in India.

How to counter this?

How do you ensure this does not create a big drain on India’s Balance of Payments? We can’t reduce this outbound travel. It is only going to increase.

We can only aim to counter the forex outflow by aiming to increase the export income earned from Inbound tourists. We need to massively develop domestic tourism as well. And the key cogs to this are roads + rail + air + communication connectivity, Hotel infra, and sensitization towards developing the country as a tourist destination.

India is also one of the few countries that has all kinds of landscape available for tourists, with relatively moderate climate. High time we put a massive thrust on our tourism, both domestic and Inbound.

Am hopeful on this sector being a massive GDP generator in the coming decade. What other steps do you think would ensure this?

That is broadly it in this week. Till next week – keep learning! And do share if you have any thoughts on our posts.