Tourism in India - another case of missed opportunities ?

Internationally, tourism occupies a very important place in the economies of several countries. Among the world's largest industry, it is forecasted to grow 4 per cent annually till 2010. It currently contributes about 11.6 per cent to the global GDP and employs about 9.4 per cent of the global labour force.

However, in India, the industry has largely remained ignored, performing well below its potential, despite the fact that India has a unique heritage and culture and a wide gamut of tourism attraction it has to offer to the world. Surprisingly, despite the winds of liberalization blowing across the country, tourism seems to have been the least affected. Even now, setting up a resort means getting as many as 72 clearances from different authorities!

Will the tourism industry in this country be yet another victim of missed opportunities? Will the tremendous potential, and the resultant benefits to the economy that it has to offer, go unexplored? And just what is the potential like?

According to figures put up by Confederation of Indian Industries (CII), an apex body representing Indian industry, by the year 2020 India could have 40 million tourist arrivals, constituting 4 per cent of the world travel. Currently, the country gets 2.4 million international arrivals or 0.4 per cent of the world travel. The report goes on to state that the industry could end up employing about 50 million people, as against 20 million now -- 10 million directly and another 10 million indirectly. At today's prices the travel and tourism economy could grow as big as Rs.10 lakh crore or 7 per cent of the GDP, as against Rs 6 lakh crore now or 5.6 per cent of GDP. Foreign exchange earnings could grow ten times, from the current US $ 3 billion to about US $ 30 billion!

Speaking to domain-B, Mr. Ravi Bhoothalingam, president the Oberoi Group and head of the tourism committee at the CII said, "Looking at the tremendous potential the tourism industry offers, it is time the government pays some attention to the needs of the industry, lest it may turn out to be another case of "opportunity lost", which will be very sad." According to him, the travel and tourism economy in India accounts for 5.6 per cent of the GDP, supports 5.8 per cent of the total employment in the country and generates 10.8 per cent of the total exports from the country.

In spite of this, the capital investment that goes into the industry is a paltry 6.4 per cent of the GDP compared to the world average of 11.8 per cent. The government's support to the industry has fallen well short of expectations and budgetary and other allocations to the sector have been 1 per cent of public spending, as against global average of 6.8 per cent. Despite this partisan approach on the part of the government, tourism in the country has registered a fairly impressive growth rate over the last few years. Says Mr. Bhoothalingam, "We, at CII, have come out with a 17 point agenda, which needs to be incorporated into the new tourism policy on the anvil if the country wants to avail the benefits the sector offers."

One of the most vociferous demands is to declare tourism an "infrastructure industry", which will help it attract low cost funds, so important to keep any industry globally competitive. Despite being the largest net foreign exchange earner and the second largest gross foreign exchange earner, after the IT industry, tourism as a segment continues to find itself ignored by the government. Insufficient aviation seating capacity, pathetic road and airport conditions, poor rail infrastructure, inadequate economical hotel accommodation and relatively high level of taxation continue to be the bane of an average international traveler. According to the World Travel and Tourism Council, an international association of the tourism industry, "Tax paid by tourists in India, is the highest in the world. Indian hotels charge about 40 per cent tax compared to other Asian countries where the tax rate varies between 3 per cent and 6 per cent." It is not surprising therefore that repeat visits of international travelers to India are few and far in between. The Indian government however stays unmoved. Strange and very criminal considering that India, as a nation, remains starved of foreign exchange and an adequate support to tourism could go a long way in bolstering its forex resreves. Needless to say that forex "Earned"in this fashion is "India's own" and not borrowed!

Procedural hassles in getting visas and poor infrastructure (including roads which are potholed, dusty and narrow to say the least) are some of the major problems that need to be attended to. Against present requirement of about 130,000 hotel rooms, India offers just about 60,000. Says Mr. Bhoothalingam, "The biggest shortfall is in the three star category. Our archaic land laws, which make land acquisition a very cumbersome process, are doing precious little to solve this problem. They render the cost of putting up a hotel very high. There is a big gap between five star and lower categories of hotels. The government needs to create separate zones and then give liberal floor space index or FSIs for setting up two and three star hotels. This will dramatically and drastically change the economics of the hotel industry."

The industry is also worried about airline seat capacity. Against a demand of 10 million seats in the international segment the supply is just about 5.3 million and in the domestic segment against a demand of 19 million supply is just about 9.79 million. According to Mr. Bhoothalingam, the demand-supply gap will get compounded with the outbound traffic growing so fast. He adds, "Our airports are bursting at the seams. We not only need more airports, but also mush better roads. The Cochin airport is a fine example of private enterprise. Privatisation is the only answer and we have to move towards open skies. The government must accept that aviation is no longer a luxury --- it is the basic need of a growing economy."

Visa facilitation is yet another process, which needs to be rationalized urgently. Stringent eligibility requirements and cumbersome procedure put off many visitors from visiting India. One of our major policy restrictive to the growth of tourism is "reciprocity", under which we give visas to citizens of only those countries which give to Indians. Countries like Bhutan, Nepal, Singapore, Seychelles, Maldives, Thailand, Turkey, Taiwan and Indonesia give visas on arrival without reciprocity as a condition. Thailand has a visa-on-arrival policy for over 140 countries and there is no reciprocity in every case. Suggests Mr. Bhoothalingam, "We should abolish visa requirements for main source markets such as USA, European Union and Japan. For other countries it should be visa-on-arrival. Finally we could have a third list of countries which could qualify for strict visa requirements." The government may however cite security concerns as prime reason for very strict visa requirements.

Advantages of tourism are plenty. It remains confined not just to urban agglomerations, but spreads its benefits deep and wide into the rural countryside providing significant gains for the economy. Further, by its very nature tourism is conducive to protecting the environment.

According to figures provided by the CII, an additional 1 million visitors can help generate revenues of Rs. 4,300 crore annually. For every Rs. 1 million of investment, tourism can help create 47.5 jobs, manufacturing 12.6 jobs and agriculture 44.7 jobs.

With just 2.4 million arrivals (0.4 per cent of the world list of international arrivals) in fiscal 2000, India finds itself ranked a poor 43rd in the world list of international arrivals, despite the fact that it boasts of some of the most exquisite sites and locales, with some of the best monuments to see. Countries far smaller in size such as France (62 million arrivals -- ranked 1st), Spain (41 million arrivals -- ranked 3^rd), Hungary (21 million arrivals -- ranked 8^th) and Poland (19 million arrivals -- ranked 9^th) are way ahead of India. Even a country as small as Sri Lanka, despite the ethnic conflicts plaguing it for the last 12 years, is ahead of India with about 4 million international arrivals.

It is time therefore that the government pulls up its socks and pushed tourism ahead. Else, it will be one more case of missed opportunities.