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Tuesday, 24 October, 2017, 11 : 15 AM [IST]

Tracing the Growth Trajectory

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Amitabh_Kant The 21st century has seen the growth and development of a new policy tool, soft power. Soft power is nothing but the use of a nation’s cultural and economic influence to persuade other nations to do something, instead of the traditional tool of the threat use of military or nuclear power. Globalisation has led to the creation of various global brands which act as powerful instruments of soft power. This soft power can be leveraged into creating cultural imprints and provide a strong boost to the Indian Hospitality, Travel and Tourism sector.

According to data, the travel and tourism sector generated a whooping INR 14.1 trillion in 2016 and ranks 7th in the world in terms of its total contribution to the country’s GDP. Additionally, the sector created 40.3 million jobs in 2016, which ranks India second in the world in terms of total employment generated. With such promising data, I believe that the potential of India tourism still remains untapped. It is a huge industry and a big wealth distributor with immense potential for investment and development.

I foresee an immense growth potential in the sector, which can be further enhanced through increased private sector involvement and participation, particularly through investments in tourism infrastructure. Just like Kerala rose after crises and worked its way to become one of the largest tourist hubs of India through the building of brands like the backwaters and Ayurveda, other states also need to emerge as tourist destinations through efforts in experiential tourism, creation of sub-brands and infrastructural investments.

Several initiatives encouraging private sector involvement have been taken to develop tourist zones around beaches. The Action Agenda proposes that the government and private sector should develop 5 of such exclusive tourism zones around beaches. Globally, beach holidays have grown by 18% over the last five years. India’s zones should be structured through master planning, including best practices in engineering and sustainability. We can model our developments drawing from examples such as Bali, Sentosa and Antalya.

Furthermore, what the industry would need next is skilled manpower for which emphasis has been laid on skill development in this sector through supporting private sector institutes in tourism regulated by the government. In addition to the state run or state supported institutes, private institutes should be encouraged to create the required talent pool. The private sector can intervene to provide elementary training at the managerial level and private institutes can do so formally.

Public Private Partnerships (PPP) have been given greater impetus in NITI Aayog’s Action Agenda. The government is exploring avenues of PPP and attracting private sector investments and technical & operational efficiencies in playing a role in creating world-class tourism circuits, exploring PPP in island development as tourist destinations and other areas. Our island chains have immense potential for eco-tourism. Instead of locking away our natural assets, we should contribute to their protection by leveraging them sustainably, as Mauritius has done. In the context of civil aviation, select airports in Tier-II cities are being taken up for operation and maintenance on the PPP mode. The Airports Authority of India Act will be amended to enable effective monetisation of land assets. The funds, so raised, will be utilised for airport upgradation. The Budget 2017 has proposed Special Purpose Vehicle (SPV) with funding from both the government and the private sector to trigger investment into the Special Tourism Zones.

Trends in the industry
Worldwide there has been a trend shift as individual aspirations have shifted from a ‘purchase economy’ to an ‘experiential economy,’ and slow independent travel has become ‘the thing’ as opposed to hectic package tours. This creates the demand for tourism sub-brands and niche products.

Union Budget 2017: the Union Budget allocated INR 1,840.77 crore to the Tourism Ministry in the budget for the next fiscal, including INR 959.91 crore for the Integrated Development of Tourist Circuits around specific themes (Swadesh Darshan scheme). It announced setting up of Five Tourism Special Zones and the Incredible India Brand will be taken to the second stage of global Campaign for boosting tourism as a part of Incredible India 2.0.

GST: This will also improve the ease of doing business and attract investment into the tourism sector.

E Visa: The new liberalised e-visa regime introduced in April 2017 would enhance both the window period as well as period of stay for foreign nationals of 161 nations, thereby providing a boost to inbound tourism. Furthermore, the facility of Tourist Visa on Arrival enabled with Electronic Travel Authorization launched in September, 2014 has helped improve India’s Travel and Tourism Competitiveness Index.

2017: India has improved 12 places to 40th position globally among 136 countries. In all, in last three years India has cumulatively improved its ranking by 25 places which is a significant achievement. However, it is way behind others in health and hygiene, security concerns, human resources and tourist service infrastructure, among others which would require targeted investments from the public and private sector alike.

International Openness 2017: In terms of International Openness, India ranks 55th, up by 14 places. This has been possible through stronger visa policies and price competitiveness. Implementing both visas on arrival and e-visas has enabled India to rise through the ranks.

International Travel Investment Opportunities: India’s figures are predominantly generated by domestic travel, which accounted for 88% of the sector’s contribution to GDP in 2016, creating immense investment potential in international travel.

India’s Travel and Tourism sector among G20 countries: India’s travel and tourism industry was also the fastest growing amongst the G20 countries, growing by 8.5% in 2016. A further 6.7% growth is forecast for 2017.

 
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