Tourism has played an important role in the development of the Indian economy. It is a service-oriented sector which not only generates foreign exchange earnings for the government, but creates substantial job opportunities and income for millions of Indians. The Indian tourism industry involves a plethora of service providers in both organized and un-organized sectors which include travel agents, tour operators, guides, hotels, guest houses, inns, restaurants and other allied services.

Fiscal year 2013 was profitable for the Indian tourism industry owing to the increasing numbers of tourist arrivals and receipts. However, the depreciation of the Indian rupee during the year affected the foreign exchange earnings in dollar terms. A challenging global economic environment and a high-base growth in the previous year slowed down growth in FY2013. Domestic tourism continued its growth trend recording a double digit growth in spending. With the rising per capita income of Indians, outbound tourism has also witnessed a period of rapid growth in the last five years.

The hospitality industry saw an increase in both the total number of hotels and rooms. This was due to increased demand for boarding and lodging facilities owing to the rising number of foreign and domestic tourists. Most of the big hotel chains were in expansion mode.

India’s growing young population and rising per capita consumption, coupled with the improvement in infrastructure and facilities bode well for the tourism sector.

Key Points:

• In 2012, the number of foreign tourist arrivals touched 6.6 million, recording a growth of 5.4% year on year.

• Foreign exchange earnings from tourism grew by 7.1% in USD terms and 21.8% in INR terms.

• During 2006-2012, spending on domestic travel and tourism grew at a CAGR of 13.6%. The total spending on domestic travel and tourism reached INR 4.1tn at the end of 2012. It recorded a year on year growth of 14% over the 2011 figure.

• Tourism is a part of trade, hotels, transport and communication group. The group’s contribution was 27% to overall GDP in 9MFY13. Hence, it was an important contributor to the country’s GDP.