Tourism and hospitality is one of the key drivers of economic growth amongst the service sectors in India and has immense possibilities of growth. A thriving hospitality industry not only contributes significantly to the economy but also drives direct and indirect employment, and is a vital source of foreign exchange for the country.
Hostels, travel agencies, transport including airlines benefit a lot from this industry. The industry also promotes national integration and international understanding.
Recent tourism statistics reveal that both domestic and foreign tourism are on a robust growth path. India's rising middle class and increasing disposable incomes have also contributed to this continued growth in domestic and outbound tourism.
FULL COVERAGE: UNION BUDGET 2017-18
This can be observed basis data shared by Ministry of Tourism that stated that over a period from 2010 - 2015, the total outbound trips saw increase by 8.7 per cent to 19.9 million in 2015. Inbound tourist volume also grew at a Compound Annual Growth Rate (CAGR) of 6.8 per cent during 2010-15.
According to WTTC, the contribution of travel and tourism industry is expected to grow by 7.9% pa to INR6,115.5 bn (2.4% of GDP) by 2026.
Another recent set of data by the Ministry of Tourism reveals that the Foreign Tourist Arrivals (FTAs) increased by 13.5% year-on-year in September 2016, while Foreign Exchange Earnings (FEEs) from tourism increased 1491 per cent year-on-year in August 2016.
This growth will need to be sustained and supported by a substantial increase in infrastructure, including air, road, rail connectivity, hotels and restaurants as well as skilled manpower.
FULL COVERAGE: RAILWAY BUDGET 2017-18
In recent years government of India has launched several initiatives to ensure that domestic and international connectivity and accessibility such as Incredible India campaign, e-visa scheme that borne positive results.
The launch of several branding and marketing initiatives by the Government of India such as Incredible India!, Swadesh Darshan and Athiti Devo Bhava have provided a focused impetus to growth and has help create niche tourism products in order to promote India as a destination 365 days and also ensure repeat visits. The Indian government has also released a fresh category of visa - the medical visa or M visa, to encourage medical tourism in the country.
Moreover, with the extension of e-visa to 150 countries as announced in the Union Budget 2016-17 also contributed to the increase of tourist arrivals into the country. India witnessed a year-on-year growth of 196.6 per cent in tourist arrivals with to 66,097 more tourists arriving on the e-Tourist Visa (e-TV) in August 2016. (Source: Ministry of Tourism)
The aviation industry too witnessed growth in 2016 coming from the capacities that the low cost carriers (LCC) have put into market place. The industry is hopeful for a steady capacity growth on routes with low demand. This is likely to trigger lower fares and good packages being offered by domestic airlines.
Moreover, under the UDAAN scheme, the regional carriers are also likely to deploy certain capacities which will open new routes like recently, Bathinda airport was launched.
Technology has also impacted the aviation, tourism and hospitality industry quiet positively. The increasing penetration of internet and smartphones are increasing convenience and making products easily accessible to potential travellers thereby increasing revenues. In coming years, technology will yet again have a significant impact on increasing profitability for the tourism sector. As the industry grows steadily, Global Distribution Systems (GDS) will become an even more essential part of its success by linking services across sectors and improving efficiencies.
Despite this bright picture, there still exists a huge gap as far as travel facilities, infrastructure, high taxes, tourist safety among others. In the upcoming Union Budget 2017-18, we look forward to the following aspects to be taken into consideration by the government.
GST: For the upcoming Union budget, I hope the government will focus on the implementation of Goods and Service Tax (GST). Additionally, the move will help lower costs for consumers thereby facilitating seamless movement of products across the country.
Emphasis on Tourism: We are also hopeful that the government will lay more emphasis on the tourism sector and provide effective solutions to promote domestic tourism. Introduction of tourism-focused states, large scale state events and shopping festivals could be some of these measures. In addition, we would also like to see some concrete steps being undertaken to aid development of tourism infrastructure such as hotels, recreational options for tourists etc.
Airport infrastructure: India is the fastest growing aviation market and yet it boasts of inadequate airport infrastructure. For example, the Mumbai airport faces severe capacity constraint and congestion which has a negative impact on the on time performance of airlines across all four metros. We do hope that this union budget the government also lays emphasis on developing sufficient airport infrastructure to support the projected growth of Indian aviation.
Regional Aviation: The new National Civil Aviation Policy (NCAP) announced in 2016 was a welcome move especially from the perspective of providing a supportive ecosystem for the middle-class citizens living in smaller towns and cities with subsidise air travel on these routes. This will also trigger the next spurt of growth for tourism coming from regional aviation and the next tourists from Tier-II and III cities. We hope that during this budget, a substantial focus would be given on regional connectivity and reviving underserved airports and developing new one in tier 2 and tier 3 cities that will propel regional connectivity.
Demonetization: At this stage, the country is witnessing demonetization, the effect of which has been felt by the tourism industry, albeit only temporarily. I am hopeful that in the Union Budget 2017, the government will work towards gaining momentum in this areas and the industry should recover soon and be well on its projected growth path in the coming year.
Ankur Bhatia, Executive Director, Bird Group