Tourism sector needs a makeover: Economic Survey

Suggests PPP mode for higher investment, capitalise on opportunities for overall growth

India's tourism sector needs an urgent image makeover with higher investment in infrastructure, through PPP mode to capitalise on opportunities provided overall growth in world tourist arrivals, the Economic Survey said today.

Global tourist arrivals are expected to increase by 43 million every year on an average from 2010 to 2030. The Survey for 2012-13 tabled in Parliament said there is also a need to address issues like high luxury taxes on hotels by states and ensure greater cleanliness and safety for tourists, which can help in giving a big boost to this sector.

"With world tourist arrivals expected to increase by 43 million every year on an average from 2010 to 2030 and FTAs in emerging countries expected to grow faster than in advanced economies, a goldmine of opportunity in tourism is waiting for India, which at present has a paltry share of 0.64% in world tourist arrivals," the survey said.

It, however, said "an image change for Indian tourism is needed with higher investment in tourism infrastructure including through PPP mode."

Calling for more private participation in the sector, the report said: "Even user charges could be levied if monuments or tourist sites are developed by the private sector or through PPP (public private partnership)."

On taxation issues, the survey said refunding VAT as done in countries like Thailand and Singapore can be replicated to help the tourism sector.

Domestic tourism is also an important contributor to the growth of this sector with a 14.34% CAGR of domestic tourist visits from 1991 to 2011. During 2011, there were 851 million domestic tourists, the Survey noted.     

The hotels and restaurants sector with a 1.5% share in India's GDP in 2011-12 is an important sub-component of the tourism sector.

As per the 12th Five Year Plan approach paper, India's travel and tourism sector is estimated to create 78 jobs per million rupees of investment compared to 45 jobs per million rupees in the manufacturing sector, the Survey said.     

"As per Tourism Satellite Account (TSA) data 2009-10, the contribution of tourism to India's GDP was 6.8% (3.7% direct and 3.1% indirect) and its contribution to total employment generation was 10.2% (direct 4.4% and indirect 5.8%)," it added.

To promote tourism, the government has taken many policy initiatives including a five-year tax holiday for 2, 3, and 4 star hotels located around all UNESCO, World Heritage sites (except Delhi and Mumbai) for hotels which start operating with effect from April 1, 2008 to March 31, 2013.