Role of tourism industry in generating foreign exchange

Role of Tourism Industry in Generating Foreign Exchange

Chapter 1

INTRODUCTION

1


1.Introduction

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.

2


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.

3


Chapter 2

World Tourism

4


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.

5


Fig 2.1: International Tourists Arrival In Millions

6


Fig 2.2:- Graph On International Tourists Arrivals

Fig 2.3 :- Graph On International Tourism Receipts

7


Fig 2.4 :- International Tourism Receipts In Billions US $

8


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%.

9


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%.

Chapter 3

Tourism Industry in India

10


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.

11


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

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.

12


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

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

13


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

14


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

15


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.)

16


Fig 3.4 :- Foreign Exchange Earnings Through Tourism

17


Fig 3.5 :- Graphical Representation of Foreign Exchange Earnings

18


Chapter 4

Global Status & Trends

4. Global Status & Trends

19


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.

20


Chapter 5

Global Market Trends

5. Global Market Trends

21


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 trips nearer home, opening up opportunities for

‘neighbouring country’ tourism.

The 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, eco-

tourism 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

22


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.

Chapter 6

India’s Place in World Tourism.

23


6. India’s Place in World Tourism.

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

24


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

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

25


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

During 2004

26


Chapter 7

India’s Tourist Profile

27


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

States, Sri Lanka, France, Germany, Canada, Japan, Australia and

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

28


Chapter 8

29


Domestic Tourism

8. Domestic Tourism

The potential of domestic tourism has grown substantially during the last

few years. As per the figures reported by the State Governments, the

domestic tourist visits in the accommodation establishments during 1999

are roughly estimated to be 176 million. An important feature of the

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).

30


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 2000-

2001 was allocated for launching of campaigns in Print Media on important

decisions and release of advertisements. The Department was to launch

promotional campaigns on important events such as Sindhu Darshan, World

Tourism Day, Baudh Mahotsav, etc. In addition to the above,

advertisements will also be released in local travel media and tourism

supplements of newspapers, journals. It has also been stated that

advertising within the country for attracting domestic tourists is mainly

done by the States.

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. It also creates the jobs at the local level, dispensing with the

need of migration to distant places for earning of livelihood. In fact,

tourism plays a major role in promoting large-scale employment

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.

31


Multifarious fairs and festivals occur throughout the year and are an

amalgam of India’s rich cultural heritage. They have added a new

dimension to the Department of Tourism’s promotional efforts. Financial

assistance is given to various State Governments to promote specific fairs,

financial assistance is extended in the form of publicity support,

particularly for releasing advertisements, printing publicity material

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.

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. The Committee recommends that allocation for funds for

domestic campaign should be adequately distributed between the

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.

32


Fig 8.1 :- Domestic Tourist Visits

33


Fig 8.2 :- Graphical Representation of Domestic Tourist Visits

34


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

35


Chapter 9

Tourism In India (2004-2005)

9 Tourism In India (2004-2005)

36


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.

37


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

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.

38


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%

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

39


Chapter 10

Hotels/Accommodation.

40


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 No. of Hotels No. of Rooms

5-Star Deluxe 55 12948

5-Star50 6654

4-Star79 6131

Heritage Hotels 62 1916

41


3-Star316 15590

2-Star324 11391

1-Star146 5059

To be classified 197 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.

42


Chapter 11

Organisations Involved.

11. Organisations Involved.

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

43


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)

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

44

http://www.tourismofindia.com/

http://cgtourism.nic.in/

http://www.arunachaltourism.com/

http://www.aptourism.com/

http://www.gujarattourism.com/

http://himachaltourism.nic.in/

http://www.tamilnadutourism.org/

http://konark.nic.in/

http://www.rajasthantourismindia.com/

http://ptdc.nic.in/

http://patnitop.nic.in/

http://www.meghalayatourism.com/

http://www.mtdcindia.com/

http://www.mptourism.com/

http://www.mptourism.com/

http://www.ktdc.com/

http://kstdc.nic.in/

http://hptdc.nic.in/

http://hptdc.nic.in/

http://tourism.andaman.nic.in/

http://tourism.andaman.nic.in/

http://delhitourism.nic.in/

http://delhitourism.nic.in/

http://citco.nic.in/

http://citco.nic.in/

http://niws.nic.in/

http://niws.nic.in/

http://www.irctc.co.in/

http://www.irctc.co.in/


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

Technology and Applied Nutrition, Bangalore

Institute of Hotel Management, Catering

Technology and Applied Nutrition, Goa

National Rail Museum (NRM)

Palace on Wheels

ITDC:

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

45

http://www.palaceonwheelsindia.com/

http://www.railmuseum.org/

http://ihmgoa.nic.in/

http://ihmgoa.nic.in/

http://www.ihmbangalore.com/

http://www.ihmbangalore.com/

http://www.wbtourism.com/

http://www.up-tourism.com/

http://www.tourisminpondicherry.com/

http://www.orissa-tourism.com/

http://www.nagalandtourism.com/

http://www.keralatourism.org/

http://www.jktourism.org/

http://htc.nic.in/

http://www.gujarattourism.com/

http://goatourism.nic.in/

http://www.goatourism.org/


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.

46


Chapter 12

Strategy in the IX Plan.

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

47


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.

48


Chapter 13

Tenth Plan Objective.

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.

49


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, adventure & eco- tourism & will promote the

development of the competitive high quality products & destinations. Most

importantly it will remove the barriers to growth & resolve the

contradictions in policy to achieve inter-sectoral convergence of activities

that help the growth of tourism.

50


Chapter 14

Indian Tourism Policy Initiatives

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

51


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

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 high-

spending 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

52


“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), Soochanaa (information), Suvidhaa (facilitation),

Surakshaa (security), Sahyog (cooperation), Sanrachnaa

(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.

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.

53


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.

Chapter 15

54


Leakages

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

55


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.

Chapter 16

56


Barriers to Growth

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

57


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 , i t 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.

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

58


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.

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.

59


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

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, taxi-

drivers, staff at eating places, porters etc., as the manner in which they

conduct themselves affects the tourist’s experience of the country.

60


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

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.

61


62


Chapter 17

Role of Department of Tourism

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

63


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.

64


Chapter 18

Tenth Plan Strategy

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:

65


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

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

66


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.

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

67


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

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 certification for adventure

tourism operators will be introduced so that the minimum standards of

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

68


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.

• 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

69


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

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

70


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

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

71


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.

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Chapter 19

The Path Ahead

19. The Path Ahead

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.

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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.

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Chapter 20

The ‘Incredible India’ Campaign

Marketing India to the World

19. The ‘Incredible India’ Campaign

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.

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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.

The Incredible India Campaign on TV

Channels Period Region

Discovery Channel

January 15-March 15,2002 (8 weeks)

Europe, Asia, Middle East & Africa

Discovery Channel

January 15-March 15,2002 (8 weeks)

South-East Asia, Australia and New Zealand

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Travel Channel

January 2002(2-3

weeks)

All Channels

BBC World January2002-March2002 (10 weeks)

Europe, Asia-pacific, Australia

CNN January 2002-March 2002 (10 weeks)

Europe, Asia, Middle East,

Africa

The campaign also made exclusive use of the internet. In March 2002, the

official website of the tourism ministry ( www.tourismofindia.com ) 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

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http://www.tourismofindia.com/


Region Total visits Percentage

Asia 188,116 49.96

North America 125,573 33.34

Oceania 37,760 10..3

Europe 22.853 6.07

South America 1,192 0.32

Africa 1,055 0.28

375,549 100.00

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,

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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

exclusive website-www.exploreruralindia.org, 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.

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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

1 Orissa Senic.Serene.Subline

2 Kerala Gods Own Country

3 Maharashtra Unlimited

4 Uttar Pradesh Amazing Heritage.Grand Experieces

5 Madhya Pradesh The very heart Of India

6 Andhra Pradesh The Kohinoor Of India

7 Goa Go Goa.The Perfect Holiday Destination

8 Gujarat Vibrant Gujarat.Where Life is a

Celebration

9 Andaman Emerald.Blue.And You

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Fig 20.1 :- Print Ads Of Incredible Taj

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

Awards-2005

Chapter 21

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Conclusion

21. Conclusion

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.

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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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Economy & Finance

Role of tourism industry in generating foreign exchange