Why India Is Unlikely To Be Celebrating World Tourism Day

Foreign tourist arrivals rose 1.6% in August 2019, compared to the 9.3% rise same period last year. 

Tourists look out from a window while visiting the City Palace of Udaipur, Rajasthan, India, on Saturday, Feb. 24, 2018. (Photographer: Prashanth Vishwanathan/Bloomberg)
Tourists look out from a window while visiting the City Palace of Udaipur, Rajasthan, India, on Saturday, Feb. 24, 2018. (Photographer: Prashanth Vishwanathan/Bloomberg)

India has 38 monuments listed as world heritage sites⁠—the fifth highest number in the world. The country’s rank on the Travel And Tourism Competitiveness Index for 2019 rose to 34 from 40—the biggest jump by any country on the index this year. India is also now the only lower-middle income country in the top 35 tourism destinations, according to the World Economic Forum.

Yet, it attracts under 1 percent of foreign travelers every year. In fact, growth in foreign tourist arrivals has been slowly moderating.

Foreign tourist arrivals stood at 7.98 lakh in August 2019, rising 1.6 percent over a year ago. The growth was far lower than the 9.3 percent rise in August 2018.

On a cumulative basis, foreign tourist arrivals between January to August 2019 rose by 2 percent as against a growth of 7.4 percent in the same duration a year ago, shows data from the Ministry of Tourism.

Foreign exchange earnings from tourism fell to $19.25 billion in January-August 2019, down 0.9 percent.

Foreign tourist arrivals in India also under-performed globally. Tourist arrivals in India rose 2.2 percent in the first half of the calendar year even as international tourism was up by 4 percent, according to the United Nations World Tourism Organisation.

Infrastructure, cleanliness, connectivity, pollution, health and safety have often been commonly cited causes of India’s inability to attract a larger share of foreign travelers.

These concerns, together with geopolitical tensions and weakness in the global economy, may have depressed growth in tourist arrivals, said industry experts.

The geopolitical situation and regional political tensions are likely to have impacted the general perception of safety and well being, said Jaideep Ghosh, partner and national head of transport, leisure and sports at KPMG. That, along with a slowdown in several parts of Europe, has impacted tourism in India, he said.

India is also facing stiff competition from other popular destinations like Malaysia, Sri Lanka, Thailand and Vietnam to name a few, said Nishant Pitti, co-founder at EaseMyTrip.

An attempt to boost tourism by easing visa processes and introducing the e-visa like many other countries has also not yielded consistent results.

Arrivals on e-tourist visas have also seen a sharp moderation in growth. Close to 1.66 lakh tourists arrived on e-tourist visas in August 2019, registering a growth of 10.6 percent on an annual basis.

During January-August 2019, arrivals on e-tourist visa rose by 19.9 percent compared to an increase of 49.5 percent in the same duration in 2018.

High tax rates and one-off factors like the grounding of Jet Airways also played a role in the slowdown seen across the industry this year.

High GST, reduced flight connectivity due to Jet Airways’ closure and a slowdown in the ‘Incredible India’ campaign have not boded well for Indian tourism, said Ashwini Kakkar, former CEO and MD of Thomas Cook India.

GST rates levied on the hospitality industry were making India uncompetitive when compared to other countries, said Pronab Sarkar, president of the Indian Association of Tour Operators. This issue, however, has now been addressed, Sarkar said.

In its last meeting on Sept. 20, the GST council reduced GST rates for high-end hotels. Rooms with a tariff of over Rs 7,501 will be charged a GST rate of 18 percent from Oct. 1 compared to 28 percent earlier. GST of 12 percent will be levied on accommodation in the range of Rs 1,001 to Rs 7,500. For rates with lower tariff, no GST will be charged.

Visa fees have also been rationalised to $25 in peak seasons and $10 for off season, said Sarkar. The slashing of tax rates has led to hopes of a pick-up in tourist arrivals prior to the festive season, Pitti added.